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From Competition
toCompatibility
Striking a Eurasian balance
in EU-Russia relations
Tony van der Togt
Francesco S. Montesano
Iaroslav Kozak
Clingendael Report
From Competition to Compatibility
Striking a Eurasian balance in EU-Russia relations
Tony van der Togt
Francesco Saverio Montesano
Iaroslav Kozak
Clingendael Repor t
October 2015
October 2015
© Netherlands Institute of International Relations Clingendael.
Cover photo: Shutterstock
All rights reser ved. No par t of this book may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording,
or otherwise, without the prior written permission of the copyright holders.
About the authors
Tony van der Togt is Senior Research Fellow at the Clingendael Institute on secondment from the
Netherlands Ministry of Foreign Affairs (MFA) since September 2014. Before joining Clingendael he
held different positions in the MFA dealing with Eastern Europe and Central Asia. He established
the first Netherlands Embassy in Kazakhstan and served as Dutch Chargé d’Affaires a.i. in Almaty
(1995-1998). He also worked at CFSP-department including as Acting European Correspondent,
as Head of Eastern Europe/Central Asia Division at the MFA and was Special Advisor on OSCE.
Most recently, he ser ved as Dutch Consul-General in St Petersburg (2008-2011) and Special
Representative for the Netherlands-Russia bilateral year in 2013.
Francesco Saverio Montesano is Research Project Assistant at the Clingendael Institute, where
he mainly works with the EU in the World knowledge group, focusing on foreign policy analysis of
European and Asian issues. Francesco holds an MSc in Global Politics from the London School of
Economics and Political Science, where he graduated (with Distinction) with a dissertation on the
strategic evolution of China’s foreign policy, focusing on security and peacekeeping engagement.
Prior to joining Clingendael, he worked as a Research Intern for the EU Foreign Policy Unit at the
Centre for European Policy Studies (CEPS) in Brussels.
Iaroslav Kozak was Research Intern at the Clingendael Institute in spring 2015. Born and raised
in Donetsk, he received his Bachelor of International Relations from Donetsk National University
in 2014. In 2015 this was followed by a Master of Arts in International Relations (cum laude) from
the University of Groningen. Iaroslav’s research interests are Eastern European geopolitics and
geo-economics, the conflict in Ukraine, soft power and propaganda.
Clingendael Institute
P.O. Box 93080
2509 AB The Hague
The Netherlands
Email: info@ clingendael.nl
Website: http://w ww.clingendael.nl/
Contents
Acknowledgements 1
Executive summary 2
1 The geopolitics of the Eurasian Economic Union 7
1.1 Introduction: a new game of unions? 7
1.2 Scope and focus of this report 10
2 Integration in post-Soviet space: from the CIS to the Eurasian Union 12
2.1 The Commonwealth of Independent States and the civilised divorce 12
2.2 Into a new millennium with the same old problems 13
2.3 The Eurasian Union: a step forward or back to the future? 15
2.4 A highly uncertain future 17
3 The Eurasian Union: gaps between theory and reality 19
3.1 Legal foundations: setting the stage for confusion 19
3.2 Eurasian Union structures: the vertical preserved 20
3.3 ‘East-West’ sanctions: the Eurasian Union ignored 22
3.4 The Eurasian Union Court: signs of life 24
3.5 Institutional weakness and intra-EEU convergence of standards,
rules and regulations 26
4 The Eurasian Union: current and future membership 27
4.1 Introduction: ‘With friends like these’ 27
4.2 Russia: geopolitics meets economic reality 28
4.3 Kazakhstan’s choice for Eurasianism 32
4.4 The hesitant trio: Belarus, Armenia and Kyrgyzstan 36
4.5 Eurasia’s fringes: from Tajikistan and Azerbaijan, to Georgia and Moldova 41
4.6 Ukraine: veritable borderland 46
4.7 Eurasian Union and Turkey 50
4.8 EU-EEU relations: a more effective bilateral approach or a more formal
multilateral relationship? 51
5 China and the EU facing Eurasian integration: strategies and interests 53
5.1 Introduction 53
5.2 Sino-Russian relations: shifting balance in the axis of convenience 53
5.3 China and the Eurasian Union: cooperation before competition 55
5.4 The EU, China and Central Asia: limited involvement vs vast ambitions 59
5.5 Broader EU-China dialogue and cooperation in a new world (dis)order? 63
6 The EU’s Eurasian Union challenge: provisional and controllable 64
6.1 From tragedy to farce 64
6.2 Three options, one choice 66
6.3 Overcoming strategic purgatory in a shared neighbourhood 69
References 76
List of abbreviations 77
1
Acknowledgements
First of all, the authors would like to express their sincere gratitude to their Clingendael
colleague Peter van Ham for his extensive help in structuring this work and its main
argumentative lines.
The authors would also like to thank three external reviewers for their constructive
comments and valuable input: Kirsti Raik (Finnish Institute of International Affairs,
Helsinki) , Nargis Kassenova (KIMEP University, Almaty) and Michal Makocki
(European Commission, DG-Trade, Brussels).
Furthermore, the authors profited much from earlier discussions on the Eurasian
Economic Union, including in the context of a Clingendael seminar on Eastern
Partnership countries between the EU and the Eurasian Union, organised at the
beginning of March 2015.
Finally, a word of thanks to Evgeny Vinokurov (Eurasian Development Bank, Center for
Integration Studies, St Petersburg), who provided us with some very useful insights,
papers and books on the development of the EEU and its present dilemmas in the
relations with the EU.
Needless to say, the responsibility for any remaining errors and misjudgements in this
report fully remains with the authors.
2
Executive summary
This Clingendael report deals with the geopolitical and geo-economic challenges posed
to the European Union (EU) by the emergence of the Eurasian Economic Union (EEU) as
a new form of ‘competing regionalism’, seeking its own (exclusive) space between the
EU and other (Asian-based) forms of integration.
In our analysis, the EEU constitutes a primarily Russia-driven integration effort in the
post-Soviet space, shaped by a rather outdated form of ‘holding together regionalism’
and based on old economic, social and cultural ties between Russia and the countries
in its ‘near abroad’. Russia’s aims are very much linked to its present broader policies,
characterised by strong geopolitical competition with the West (including increasingly
with the EU in par ticular) in an effort to ultimately rewrite the rules by which the
global order, seen in Moscow as overly dominated by the West, is governed. It was this
renewed geopolitical competition that led to the Ukraine crisis and to the most serious
deterioration in relations between Russia and the West since the end of the Cold War.
These Russian views appear not to be shared (or at least much less so) by the other
EEU members, which are either more distant from the geopolitical logic of spheres of
influence or simply the subjects of it. The Ukraine crisis has even led to new political
divisions between Russia and other EEU member states, giving the latter more reason
than ever to strengthen their preference for multi-vector policies, in which they hedge
their bets in a primarily western (EU) or eastern (China) direction.
Such political divergences inside the EEU add to already existing internal inconsistencies
and institutional weaknesses within the Eurasian Union, which is based on a form of
top-down integration, where the main decisions are taken at the highest level, to be
followed by sometimes weak implementation at the national level. However, in spite of
all its weaknesses, this new EEU is likely to persist for at least a few more years, and
the EU will thus have to formulate some answers as to how to deal effectively with
the new challenges posed by this Russia-dominated organisation, especially in the
“shared neighbourhood”, but also in Central Asia.
A certain level of engagement with the EEU and its member states could even help
re-establish some form of dialogue with Russia on the EU’s broader relations with
the Eurasian region. However, as long as the present Ukraine crisis continues, not too
much should be expected on the political level from such a dialogue, as we expect the
Kremlin’s geopolitical views on the region to persist, at least in the short-to-medium
term.
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From Competition to Compatibility | Clingendael Repor t, October 2015
The main geopolitical challenge posed by Russia lies in its unwillingness to let outside
partners (like the EU) have an impact on the modernisation of the economies and
societies of states in the ‘shared neighbourhood’ by integrating them into the broader
and better diversified European markets. At present, Russia seems unwilling to accept
any pro-European choice on the part of post-Soviet states, unless it is in line with
Russia’s own relations with the EU, as shown most poignantly in the case of Ukraine.
According to this view, the road to Brussels has to go via Moscow.
After the return of President Putin to the Kremlin in 2012, Russia chose not to continue
adhering to the modernisation/transformation policies pursued under President
Medvedev, and has deserted its previous course of closer approximation with EU
standards, rules and regulations. In an effort to strengthen its ‘polar’ position as the
centrepiece of its own new integration project, Russia has been putting strong pressure
on the other post-Soviet states to choose Russia-led Eurasian integration instead of
Brussels-led wider European integration. In doing so, it has framed recent developments
as a ‘battle’ between two forms of regional integration in a ‘competition of Unions’
based on fundamentally diverging principles; it has even presented this as some kind of
‘civilisational choice’ for the post-Soviet countries concerned.
A major consequence was that new dividing lines were drawn across Europe,
with the countries of the EU’s Eastern Partnership caught somewhere in the middle of
what could be referred to as a ‘strategic purgatory’. As a result, Russia’s geopolitical
challenge in Europe has also acquired the features of a major geo-economic
challenge. The EU, as a major economy and trading bloc, has a long-term strategic
interest in finding ways to overcome the (new) constraints emanating from the
emergence of these new (inter)regional rifts. The key challenge is how to overcome the
new divides in the short term, not only by mending the currently very strained relations
with Russia, but also by changing EU relations with the other post-Soviet states.
At the same time, new dividing lines threaten to appear in Asia, where China has
plans for a Greater Asian integration, hinging on mainly economic initiatives such
as the New Silk Road, which would bridge China with Central Asian, Eurasian and
European economies. In that context, there may be opportunities for the EU to engage
with Beijing in order to counter attempts to frame the new geo-economic developments
as a geopolitical game of ‘competing unions’, in which everyone will end up losing out
economically.
It remains to be seen whether Russia will eventually return to a more open policy of
internal modernisation and restart working concretely on its earlier Greater European
integration project ‘from Lisbon to Vladivostok’. Presently, geopolitical considerations
seem to dominate in Moscow. Therefore, although that may change in the medium to
long term, economic arguments will currently have only a limited impact in the Kremlin
and could even be used by Russia in an attempt to divide the EU on the issue of
sanctions.
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From Competition to Compatibility | Clingendael Repor t, October 2015
Accordingly, the Ukraine crisis as seen by Moscow will not be solved by any
‘functionalist’ dialogue through and with the EEU, although some of the negative
consequences may be alleviated if the EU manages to achieve concrete results in
its trilateral talks with Moscow and Kyiv. But for that purpose, the Commonwealth of
Independent States (CIS) Free Trade Area (and its members) seem to be more important
than the EEU. Ultimately, for Moscow this is a long-term game, still aimed at somehow
forcing Ukraine back into Moscow’s orbit, however unrealistic that may appear to
Western observers.
Based on our analysis of the EEU and the policies of its different member states,
starting with Russia, we envisage three possible options for the EU in dealing with
the Eurasian Economic Union:
Full Engagement: This option, based on forging a new strategic partnership
between the EU and Russia/Eurasian Union, is unrealistic in the present
circumstances, as it would imply acceptance of Russia’s predominance in its own
orbit and its self-conceived right to act on behalf of the Eurasian Union as a whole.
The EU would probably also risk having to give up active support to a number of
those inside Russia who would like to return to the previous course of modernisation
of Russia’s economy and society based on liberal-democratic values and rule of law,
as this would be perceived by Moscow as infringing on its own sovereignty. For the
EU, it could imply giving up on its soft power agenda of promoting democratic values
and human rights. Deprived of EU backing, Ukraine would have to comply with
Russian demands and give up its pro-European choice, thereby negatively affecting
the EU’s credibility as a foreign policy actor – unable to influence the geopolitical
course of events even in its own neighbourhood.
Tentative Compatibility: This strategy would enable Eastern Neighbourhood
partner countries to keep their options open as much as possible, towards both
EU and Russia: ‘no choosing, no losing’. It would seek to find formulae under
which those countries could have an Association Agreement plus a Deep and
Comprehensive Free Trade Agreement (DCFTA) and still combine that with
participating in an eastern CIS Free Trade Area (FTA), therefore preserving their
multi-vector policies. This strategy would aim to establish and develop informal
and more technical discussions between EU and EEU, so as to promote as much as
possible harmonisation of standards and approximation with EU acquis. It would
allow Eastern Neighbourhood partners to profit from a more differentiated bilateral
approach, having their voices fully taken into account in the context of multilateral
discussions, which would also involve the EEU as such. Ukraine should benefit
from such a strategy, as direct Russian influence would be reduced and other
less uncompromisingly isolationist voices, like that of Kazakhstan, would gain
relatively more significant weight. Overall, this approach would create considerable
opportunities for bridging some of the gaps emerging in the aforementioned context
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From Competition to Compatibility | Clingendael Repor t, October 2015
of ‘competing unions’, while waiting for Russia to return to its previous course of
modernisation and integration into the global economic and political order.
Competing Unions: This strategy would stipulate that the EU confront Russia
geopolitically head-on and try to ‘lock’ Eastern partner countries as soon as
possible into European and transatlantic institutionalised frameworks. It would also
imply leaving the former strategy of giving priority to relations with Russia firmly
behind and replacing it with an ‘Eastern Partners first strategy’. That would require
adoption of a far-reaching set of economic and financial policies aimed at promoting
the integration of countries like Ukraine into the European marketplace and
compensating them for any loss stemming from the resulting shrinking importance
of Russian markets and the likely Russian retaliatory measures. Clearly, this strategy
is highly unrealistic, at least in the short run, as the EU is unwilling to take on that
burden and unable to wage such a geopolitical battle with Russia in light of its own
internal weaknesses and the significant interests of many of its member states in
their own bilateral relations with Russia.
In our view, a strategy of ‘Tentative Compatibility’ is the most realistic under the
present circumstances. It provides a pragmatic, viable and cautious benchmark, aimed
at bridging the gaps forming across new dividing lines as much as possible and keeping
further options open for the future. It could foster the establishment of a platform for
dialogue with Russia (and EEU member states) , by delinking at least some of the more
technical aspects of trade relations from the strained political relations caused by the
Ukraine crisis.
Based on this strategy, our recommendations for the EU on dealing with the Eurasian
Economic Union are as follows:
– In its new European Neighbourhood Policy (ENP): combine multilateralism
(which would also entail the development of new multilateral platforms) with a
more differentiated bilateral approach; invite EEU member Kazakhstan to join ENP;
encourage other key Eurasian actors such as Russia, China and possibly Turkey to
participate in multilateral platforms for dialogue to overcome gaps between diverging
and competing regionalisms; address the security implications of the presently
‘competing unions’ in the context of the Organization for Security and Co-operation
in Europe (OSCE), including in the economic and environmental dimension.
– Engage the Eurasian Economic Union in informal and more technical discussions
to look at closer approximation in standards, rules and regulations; in a similar way,
discussions should be held bilaterally with the countries of the CIS FTA to further
explore compatibilities between DCFTAs and the CISFTA and options for a future
‘Greater Europe from Lisbon to Vladivostok’; EEU member states should be able to
participate alongside Russia and the EEU Commission on an equal basis to enable
them to continue their multi-vector policies of ‘no choosing, no losing’.
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From Competition to Compatibility | Clingendael Repor t, October 2015
– Continue to work actively with EEU member state Armenia to explore possibilities
for an ‘AA-minus’ (without a DCFTA) and subsequently offer such options to EEU
members Belarus and Kazakhstan as well.
– Step up the strategic partnership with China to explore possibilities of linking the
New Silk Road initiative to any Greater Eurasian integration prospects, including
in the context of the Shanghai Cooperation Organization. As far as the latter is
concerned, the EU should stimulate its evolution towards a more multifaceted
platform, giving more weight to economic elements, and then opt for observer status
as part of its more intensive cooperation with China (which could then be offered
a similar status within a reformed ENP in return) .
– All of the elements mentioned above should be taken into account, when developing
a revised EU Security Strategy to be adopted in 2016.
7
1 The geopolitics of the
Eurasian Economic Union
1.1 Introduction: a new game of unions?
In January 2015, Russia, together with Armenia, Belarus and Kazakhstan (Kyrgyzstan
joined in May) launched the Eurasian Economic Union (EEU, or, in short, Eurasian
Union1). Loosely modelled on the European Union (EU), the Eurasian Union has a
Moscow-based executive body (the Eurasian Economic Commission), a political body
(the Supreme Eurasian Economic Council) and a court based in Minsk. This new Union
builds on the previously developed Customs Union and strives for an internal single
market, supported by free movement of people, capital, goods and services. Russian
plans are even bigger and would include a broader political union and movement
towards a financial union as well. All this is laid down in a massive 900-page treaty.
Given the multilateral qualities of this Moscow-led initiative, one would expect it to stir
at least some modest applause within the EU. The EU has always encouraged regional
cooperation and multilateralism across the world, from Asia (e.g., ASEAN) and Africa
(the African Union), to Latin America (MERCOSUR). But the case of the new Eurasian
Union was considered in a more negative light. At best, the Eurasian Union (and its
predecessor the Customs Union) was largely ignored in the West, even before the
Ukraine crisis. At worst, it was considered with suspicion as an artefact of Russia’s
never-ending nostalgia for the USSR, a new neo-imperialist project to become part of
President Putin’s historical legacy. Putin’s claim that the Eurasian Union would become
a ‘powerful and attractive economic development centre, a major regional market
[drawing] large-scale trade from Europe and Asia’ certainly raised some eyebrows.2
Putin’s exultant statements gave rise to the question of whether Russia and other
autocratic strongmen of the Eurasian Union were aiming to emulate the European Union
or, instead, create a Soviet (Re-)Union.3
1 As will be spelle d out further on in this r eport , we are aware of the political reasons behind the persistence
of the ‘economic’ des criptor – t herefore any use of ‘Eur asian Union’ as a synonym for the EEU is exclusively
for the sake of brevit y.
2 ‘Where Thr ee is a Crowd’, The Economist, 30 May 2014.
3 Michel, C. 2015. ‘Even Vladimir P utin’s Authoritarian Allies ar e Fed Up with Russia’s Cr umbling Economy’,
New Republic, 18 January, http://www.newrepublic.com/article/120778/eurasian-economic-union-putins-
geopolitical-project-already-failing (accessed July 2015) .
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From Competition to Compatibility | Clingendael Repor t, October 2015
Some analysts predict an emerging geopolitical ‘Game of Unions’ between the EU on
the one hand and the Eurasian Union on the other, both vying for influence in a shared
strategic neighbourhood.4 Others originally foresaw a somewhat more hopeful future
for the Eurasian Union (at least before the Ukraine crisis), arguing that ‘a viable form
of advanced economic integration, a worthy competitor to that offered by the EU, has
emerged in the post-Soviet space’, implying that ‘the EU is no longer the only source
of effective governance in the region’.5 This view is supported by some Russian think-
tankers as well who, like Evgeny Vinokurov (head of the Eurasian Development Bank’s
own think tank), focus on the economic potential of closer cooperation among countries
within the Eurasian region. However, especially after the Ukraine crisis, most Western
observers claim that given Moscow’s irredentism and its sinking economic and financial
fortunes, the Eurasian Union is dead on arrival. Nate Schenkkan, for example, sees the
Eurasian Union as Putin’s personal ‘vanity project’ which ‘will survive as another hollow
post-Soviet multilateral institution celebrated with presidential summits but producing
no progress toward its stated goals’.6
This indicates that, as always, the economic and political reality behind the Eurasian
Union’s flashy headquarters in Moscow and President Putin’s rhetoric of a ‘new epoch’
of regional integration is both more complex and more mundane, as well as more
uncertain. Since Ukraine decided against any relationship with the EEU project (in
2014) and now aspires to join both the EU and NATO, the Eurasian Union may well turn
out to be a non-starter. As the second largest of the 15 post-Soviet states, Ukraine’s
membership of the Eurasian Union was considered crucial to give more multilateral
credibility to the project, most importantly by offsetting Russia’s dominance and by
providing the Eurasian Union with stronger and more extensive links between energy
producers in the East and those in the rest of Europe. Ukraine’s strategic shift towards
the West is Putin’s biggest disappointment because (as Zbigniew Brzezinski famously
argued) ‘[w]ithout Ukraine, Russia ceases to be a Eurasian empire’.7
Indeed, despite Russia’s lingering geostrategic objective of using the Eurasian Union to
curtail Western influence in what it still considers its ‘near abroad’, most member states
mainly participate in order to benefit from the many incentives offered by Moscow (often
4 Popescu, N. 2014. ‘Eurasian Union: The Real, the Imaginary and the Likely ’, Chaillot Paper, no. 132,
http://w ww.iss.europa.eu/publications/detail/article/eurasian-union-the-real-the-imaginary-and-the-
likely/ (accessed July 2015).
5 Dragneva, R. and Wolczuk , K. 2012, ‘Russia, the Eurasian Customs Union and the EU: C ooperation,
Stagnation or Rivalry? ’, Chatham House Briefing Paper, 1 August, 14.
6 Schenkkan, N . 2014. ‘Eurasian Disunion : Why the Union Might Not Survive 2015’, Foreign Affairs,
26 December.
7 Quoted in Vitk ine, B. 2014. ‘ Vladimir Putin’s Eurasian Economic Union Gets Ready to Take On the World’,
The Guardian, 28 October.
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From Competition to Compatibility | Clingendael Repor t, October 2015
in parallel to membership and on a bilateral basis), for example cheaper gas, loans,
Russian investment and access to Russia’s labour market. Russian attempts to include
all of its Western partners in the ‘near abroad’ in the Eurasian Union succeeded only
in the case of Armenia, the others (most prominently Ukraine, but also Moldova and
Georgia) declining the offer and deciding on their own pro-European (i.e., EU) choice.
Putin’s idea for the Eurasian Union is to become a Moscow-centred pole between
Brussels and Beijing, but accession candidates further east such as Tajikistan
and Uzbekistan now seem reluctant to join the Eurasian Union, and are instead
strengthening their ties with China in the context of their own multi-vector policies. It is
clear that even Putin’s authoritarian allies are fed up with Russia’s crumbling economy
and realise that they have much more to gain – both economically and politically – from
pivoting towards China or the EU (and in some cases towards both).
Despite all these caveats and complications, the Eurasian Union poses a significant
policy challenge to the EU. This comes at a time when the EU’s own strategy towards
its eastern neighbours is under review, and has been heavily criticised as being both
impotent and strategically naïve.8 Brussels’ Eastern Partnership (EaP) has offered only
few and limited instruments to tie several post-Soviet states to the EU through trade,
and through economic and visa agreements. The question of what to do, therefore,
becomes increasingly per tinent, even more so in light of the Ukraine crisis.
Furthermore, the existence of the Eurasian Union may also offer some opportunities to
at least reopen some form of dialogue with Russia on broader trade relations, including
with EaP countries like Ukraine. It also opens up the opportunity to include China as
the most important eastern neighbour of the Eurasian Union in discussions on the
economic future of the ‘region in between’, including by linking up with China’s New
Silk Road. In the long term, this could also lead to revival of the idea of a broader free
trade area from Lisbon to Vladivostok, as originally proposed by President Putin in 2010.9
At the time, that idea was supported in the EU as well, especially in Germany. German
Chancellor Angela Merkel still referred to this idea in her speech at the World Economic
Forum in Davos, in January 2015.10
8 Lang, K-O, and Lippert, B . 2015. ‘EU Option on Russia and the East ern Par tners’, SWP Comments, no. 12.
9 ‘‘From Lisbon to Vladivostok’ : Putin Env isions a Rus sia-EU Free Trade Zone’, Der Spiegel, 25 November
2010. http://www.spiegel.de/international /europe/from-lisbon-to-vladivostok-putin-envisions-a-russia-eu-
free-trade-zone-a-731109.html (accessed August 2015) .
10 Schumacher, E. 2015. ‘Mer kel praises EU, criticizes Russia at Davos’, Deutsche Welle, 22 January.
http://dw.com/p/1EP8G (accessed August 2015) .
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From Competition to Compatibility | Clingendael Repor t, October 2015
1.2 Scope and focus of this report
This Clingendael report examines the prospects of the Eurasian Union and asks what
strategic impact a Russian-dominated bloc or alliance would have on the EU and its
partners. One of the key questions hovering around the geopolitical debate is whether
the countries in Eurasia will have to choose between the Eurasian Union and the EU,
or whether both integrationist structures are somehow compatible. The EU’s offer to
Ukraine of an Association Agreement (initialled in March 2012) was interpreted by
Russia as an infringement of its strategic ‘near abroad’ interests, setting the ball rolling
towards Kyiv’s Euromaidan revolution of February 2014. This suggests that Russia, at
least at the time, considered this a zero-sum game. However, Nicu Popescu argues
that Eurasian Union-EU ‘competition’ does not force countries in the region to make
either-or choices. Instead, he suggests that, ‘Dozens of states in the world have multiple
free trade areas (…) and the EU offer of free trade [does] not constrain Ukraine’s
foreign policy trade choices.’
11 This raises the question how the EU should formalise
its relationship with the Eurasian Union. Vladimir Chizhov, Russia’s ambassador to the
EU, claimed in January 2015, that ‘Our idea is to start official contacts between the EU
and the [Eurasian Union] as soon as possible (…) The EU sanctions [on Russia] are
not a hinder [sic].’ He suggested that Russia still aims to establish a ‘free trade zone
encompassing all of the interested parties in Eurasia’.12 Clearly, the EU has much to
gain from restoring its functioning relationship with Moscow, but at what price? Could
cooperation between the EU and the Eurasian Union be a step towards normalising
the West’s relationship with Russia, and even mitigate the trend towards a geostrategic
struggle for influence in their shared neighbourhood?
This repor t studies the formation of the Eurasian Union in the wider context of the
rise of China and the development of new strategic alliances such as the BRICS (the
grouping that includes Brazil, Russia, India, China and South Africa) and the Shanghai
Cooperation Organization (SCO). Russia’s efforts to strengthen its influence in Eurasia
are part of a larger trend toward regionalism in what is sometimes billed as a ‘new
age of empires’.13 How many trading blocs will eventually emerge is unclear – but the
change towards rising regions within a fragile multilateral trading system seems clear-
cut and inescapable. Rationales for the rise of regionalism are a mix of economics
and geopolitics. China’s efforts to develop a New Silk Road linking Asia to Europe
(through the Middle East and Central Asia) are an important part of that new dynamic.
11 Popescu, N., op. cit ., p. 38.
12 Rett man, A. 2015. ‘Russia Calls For EU Talks Wi th Newly B orn Eurasian Union’, EU Observer, 2 January.
https://euobser ver.com/economic/127081 (accessed August 2015).
13 ‘Competing Regionalism – Pat terns, Economic Impact and Implications for the Multilateral Trading system’,
20 07, Intereconomics, Forum, September/October, 236-59, and Verhofstadt, G. 20 09. Een Ne w Age of
Empires, Amster dam, De Bezige Bij.
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From Competition to Compatibility | Clingendael Repor t, October 2015
Russian Foreign Minister Sergey Lavrov’s remark that the Eurasian Union is a ‘serious
element of a bridge between Europe and the Asia-Pacific Region’ should be understood
in this geostrategic context.14 It implies that the development of the Eurasian Union
should be analysed as one element of an institutional recalibration in the vast area
between the EU and China that will reflect the new economic, political and militar y
power realities of the main strategic players. What role the EU can (and should) play in
the decade ahead in this broader context is another central element in this report.
The repor t is structured as follows: Chapter 2 sur veys the historical trajectory of post-
Soviet cooperation and integration, from the Commonwealth of Independent States
(CIS) to the Eurasian Union. Chapter 3 offers an in-depth analysis of the Eurasian Union
itself – its legal foundations, its institutional development (and future plans) and its
decision-making procedures. Chapter 4 examines the current line-up of Eurasian Union
members, and analyses Russia’s strategy as well as the economic, political and strategic
motives of other member states for joining this initiative and the consequences thereof.
It also studies the prospects of this Union’s engagement with the rest of Central Asia
(Uzbekistan and Tajikistan) , the Southern Caucasus (Georgia and Azerbaijan) and
Moldova. We assume that a change in Ukraine’s pro-EU choice is very unlikely in the
short term, although some in Russia still cherish the hope that Ukraine’s position might
be reversed in the context of a broader settlement. Finally, we will look at some of the
consequences of a renewal of the EU’s Eastern Partnership and the possibility, or not, of
working with Russia in that context. Chapter 5 shifts attention towards the role of China
and the EU in Eurasia. Although not a member of the EEU, China’s economic impact and
strategic presence in Central Asia makes it a significant player in the region, whereas
the EU’s role is minor and waning, with seemingly very little prospects for improvement.
Furthermore, China’s New Silk Road plans also raise questions about the possibilities
for (re-) linking competing integration projects in a greater Eurasian context. Could the
EU somehow work with China to overcome new dividing lines, as Chinese interests do
not fully coincide with Russian plans? Against this analytical backdrop, the final chapter
offers insights into the reality and prospects of the Eurasian Union, and suggests
three different policy options for the EU. This concluding chapter also considers the
implications of future forms of Eurasian cooperation and integration for the Netherlands’
EU Presidency in the first half of 2016.
14 Quoted in Dobbs, J. 2015. ‘The Eur asian Economic Union: A Bridge to Nowhere ?’, European Leadership
Network, 4 March.
12
2 Integration in post-Soviet
space: from the CIS to
theEurasian Union
2.1 The Commonwealth of Independent States and
theciviliseddivorce
The histor y of post-Soviet cooperation could be summarised as a Groundhog Day of
disappointments and illusions. Time after time, new initiatives have come to nought,
and declarations of good intentions have been betrayed by self-centred autocratic
leaders. The Eurasian Union has a long pedigree and is the latest effort to integrate
(part of) the post-Soviet space. The Commonwealth of Independent States (CIS) is
the oldest integration framework in the region, emerging directly after the relatively
peaceful disintegration of the Soviet Union. In December 1991, Russian, Ukrainian and
Belarusian leaders met to disband the USSR, expressing their collective will to create
a new commonwealth as its successor. The founding document of the CIS (signed on
21 December 1991 in Almaty by all former Soviet republics, excluding the Baltic states
and Georgia) offered an ambitious, integrationist agenda. The CIS was supposed
to develop a ‘common economic space, common European and Eurasian markets
and customs policy’.15 A few years later, however, the CIS had already lost political
momentum. Instead of encouraging post-Soviet cooperation, it proved little more than
(in the words of the Ukrainian President Leonid Kravchuk) an ‘instrument of civilised
divorce’.16 In itself, this was no mean feat. The bloody civil war in former Yugoslavia
showed that strategic ‘divorces’ could go terribly wrong. Instead, the break-up of the
USSR was relatively well managed and even the most difficult issues (like the future of
the Crimea, and the status of nuclear weapons outside Russia) were resolved peacefully.
However, civil wars in successor states (Georgia, Moldova and Tajikistan) flared up, and
could only be (temporarily) resolved after Russian intervention, safeguarding Russian
interests and giving Russia a foothold to continue influencing these newly independent
countries.
Most Soviet successor states had ample reasons to keep the CIS alive for (what proved
to be) at least another decade. Most notably, economic and cultural ties crafted during
15 Charter Establishing the Commonwealth of Independent States (CIS), adopt ed 22 Januar y 1993 Minsk, art . 4.
16 Quoted in Mazurin, M. 2001. ‘Ten Years Ac cording to the People’s Initiati ve’, Day, 4 December. http://www.
day.kiev.ua/en/article/day-after-day/ten-years-according-peoples-initiative (accessed August 2015).
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Tsarist and Soviet times proved too strong to neglect. Most post-Soviet autocratic
leaders were also keen to boost their image with photo opportunities at CIS summits,
signing lofty declarations that existed only on paper. But political support for the CIS
quickly dwindled, due to the diverging economic orientations of its members. When the
post-Soviet economies began to recuperate from the initial shock of the break-up of the
USSR, political elites simply lost interest in any fur ther integration, turning the CIS into a
political circus of ambiguity and backstabbing. The CIS formula of ‘minimal involvement
with a maximum number of members’ clearly proved to be detrimental to profound and
multifaceted integration.
As a result, several ad hoc cooperative plans among post-Soviet states cropped up, most
notably the initiative by Kazakhstan’s President Nursultan Nazarbayev (voiced in 1994) to
establish a Eurasian Union. This was billed as a fully-fledged equivalent of the European
Union, with strict membership criteria. As the proposal met only with lukewarm
reactions, it was quickly shelved and followed by a more modest plan to establish a
small-scale Central Asian Union (created in 1994, renamed as Central Asian Economic
Community in 1998; see Table 1) with Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan
as prospective members. In the end, only Kazakhstan and Uzbekistan decided to set up
a free trade zone, whereas other Central Asian states either rejected the idea outright
or kept their polite distance. Other initiatives included bilateral cooperation between
Moscow and Minsk, launched with much pump and circumstance (in 1996) as the Union
State of Russia and Belarus. This Union State involved several quasi-supranational
institutions as well as a customs union that would quickly prove unworkable and join
the long line of failed post-Soviet initiatives. In 2000, Russia, Belarus, Kazakhstan,
Kyrgyzstan and Tajikistan and, temporarily (from 2006 to 2008), also Uzbekistan
made another attempt at regional cooperation by establishing the Eurasian Economic
Community (EurAsEC) , which proved to be the harbinger of the Eurasian Union.
2.2 Into a new millennium with the same old problems
Vladimir Putin’s ascension to power in 2000 opened a new chapter in the story of
Eurasian integration. Unlike his predecessor, Putin sees the integration of post-Soviet
space as a means to restore Russia’s lost glory, and has been willing to use a mixture of
incentives, manipulation and coercion to achieve his geopolitical goals (see Chapter 4.2) .
In the first year of Putin’s rule, the Eurasian Economic Community was founded. It was
an elaborate and complex organisation, with an Interstate Council (of heads of state),
an Integration Committee and Secretariat (as the main executive body), an Inter-
Parliamentary Assembly and a court. From the start, Integration Committee decisions
were made by a qualified majority voting in order to overcome the veto power of member
states (apart from Russia, which could block decisions as it carried 40 percent of the
vote). The new organisation was given the familiar task of crafting a customs union and
a ‘single economic space’, this time with clear deadlines following a step-by-step plan.
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The EurAsEC was later joined by Uzbekistan as a full member; Ukraine, Moldova and
Armenia became observers.17
Despite Putin’s efforts to rebuild the realm of Russian power, the EurAsEC quickly turned
into just another phantom post-Soviet organisation. Political integration floundered
completely, due to the suspicions (and even fears) of a renewed Russian appetite for
hegemony and imperialism. Economically, the EurAsEC proved of little or no benefit to
its members who were keen to diversify their trade away from Russia towards the EU
and China. A parallel initiative emerged in 2003 to set up a ‘single economic space’
involving Russia, Belarus, Kazakhstan and Ukraine (which was not even a full member
of the EurAsEC); however, this collapsed two years later with Ukraine’s so-called Orange
Revolution (2004-05). Although the EurAsEC was no direct precursor of the Eurasian
Union, it did pave its way by preparing the political ground.
From 2006 onwards, Russia, Belarus and Kazakhstan (the three most engaged
countries) found themselves at the ‘hard integrationist core’ of a stagnating EurAsEC.
These countries, led by a trio of autocratic strongmen, decided to re-launch Eurasian
integration with fewer participants and based on a shared economic need to take
concrete steps towards a customs union. Although hardly a radical break with previous
projects, the newly-established Customs Union (CU, formed in 2010) followed a strict,
pre-approved schedule. This initiative had both economic and political motivations.
The global economic crisis, which began in 2008, deeply affected the Russian economy,
spurring a move towards regionalisation to create a quasi-protectionist bloc that could
serve as a buffer to keep the negative consequences of globalisation at bay. The CU
was also billed by President Putin as a strategic reaction to the EU’s enlargement
towards Central Europe (in 2004), the subsequent ‘colour revolutions’ in Ukraine,
Georgia and Kyrgyzstan, and the EU’s further encroachment in Eastern Europe through
its European Neighbourhood Policy (ENP) and Eastern Partnership (EaP).18 Further
Eurasian integration with the Customs Union at its core quickly became one of Putin’s
top priorities as returning president (as of May 2012).
As with most post-Soviet initiatives, the CU entailed a variety of new institutions,
of which the Commission of the Customs Union (known since 2012 as the Eurasian
Economic Commission) became the most important. The Commission’s decisions were
binding for all members, and thereby contributed to the elimination of existing trade
barriers and the development of a system of common external tariffs. In 2012, member
states upped the ante by announcing the creation of the Single Economic Space,
comprising harmonised standards and regulations. The EurAsEC Court (mentioned
17 Dragne va, R. and Wolczuk, K., op . cit., p. 19.
18 Council of Federation of Russia, 2009. ‘Восточное партнерство’:пробле мы реализа ции и возмож ные
последствия, 33-37, http://council.gov.ru /media/files/41d44f243fdc22b87385.pdf (accessed May 2015).
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From Competition to Compatibility | Clingendael Repor t, October 2015
above) was made to good use as the much-needed conflict-resolution body of the CU.
Protracted arguments between member states over decision-making rules marked
their different visions of the finalité politique of the CU and the Eurasian Economic
Community. In 2007, Kazakhstan’s initial proposal to give each member one vote
and take all decisions by simple majority was ultimately rejected in favour of a more
sophisticated and, in fact, less ambitious scheme giving Russia de facto veto power.19
Furthermore, it was agreed to resolve all issues of principle by consensus. In practice,
this arrangement led to a situation where consensual decision making prevailed, which
explains the region’s sluggish movement towards a genuine customs union.
2.3 The Eurasian Union: a step forward or back to the future?
On 1 January 2015, the Customs Union transformed into the Eurasian Economic Union
(EEU, often simply referred to as simply the Eurasian Union). The next chapter will
examine EEU institutions and ambitions in more detail. For now, it is important to point
out the elements of continuity and change connecting previous integrationist efforts in
the post-Soviet space with this new Union. As in the past, the main drivers of integration
are economic necessity and political ambition. Russia’s neo-imperialist aspirations in
particular explain the push to make the CU a (moderate) success, and to use it as the
foundation of (and even catalyst for) a more ambitious and comprehensive Eurasian
Union. Three critical features of the Eurasian integration process (since 2007) present
themselves.
First, Russia’s strategy to create a union as quickly as possible by announcing pre-set
deadlines has generally resulted in confusion and disappointment. Institutions were
‘reformed’ and a flurry of new regulations decreed, but usually before the appropriate
preparatory stages were completed. As a result, almost all post-Soviet integration
structures have been overwhelmed by continuous squabbles over decision-making
procedures and spheres of competence between a swelling, unwieldy body of
institutions. These institutions were supposed to perform the complex task of developing
and managing an economic union (of sorts), without much experience in a political
environment not used to supranational regulation. This explains the customary lack of
concrete results and the lack of progress.
Second, Russia’s geopolitical ambitions set it apart from all other member states,
whatever the form and shape post-Soviet integration has taken so far. Although the
Eurasian Union will be the most advanced form of regional cooperation the former Soviet
bloc has seen, its members participate mainly for mundane economic and financial
19 Cooper, J. 2013. ‘The development of Eurasian ec onomic integration’, in: Eurasian Economic Integration:
Law, Policy and Politics, 21, eds. Dragneva, R. and Wolczuk, K., Edward Elgar, Cheltenham.
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reasons, or because politically they have no alternative option but to play along with
this Russian initiative in order to avoid problems in their bilateral relations with Moscow.
Lower energy prices from Russian producers like Gazprom and Rosneft (offered by
Russia in parallel and on a bilateral basis as a unified single market for energy within the
Eurasian Union has been postponed to a later date) are enticing carrots, far outweighing
the modest trade benefits that a strong economic union could reap. The removal of
trade barriers within the CU has not advanced intra-bloc economic activity; since 2001,
annual trade among CU members grew by a modest 1.5 percent.20 Russian suggestions
to beef up the Eurasian Union with provisions for a common currency, citizenship and
a joint border force have been anathema to Kazakhstan and Belarus. Deputy Economy
Minister Timur Zhaqsylyqov told reporters in Astana in April 2015 that ‘Kazakhstan
has a clear and consistent position on excluding the possibility of introducing a single
currency within the framework of the Eurasian Economic Union.’21 Russia also dropped
its proposals for a Eurasian Union parliament after Kazakhstan objected. Kazakhstan’s
President Nazarbayev made this clear by including the word ‘economic’ in the official
name of the organisation, stressing that this new Eurasian endeavour was most certainly
not a project aimed at promoting political integration.
Third, very few countries seem willing to join Russia’s new integrationist initiative.
Existing members have already proven themselves unwieldy allies of Moscow by, for
example, obstructing Russia’s proposal (in June 2014) for the Eurasian Union to block
duty-free imports from Ukraine. Only Armenia, which is dependent on Russian economic
and military support in its conflict with neighbouring Azerbaijan over Nagorno-
Karabakh, is relatively compliant with Moscow’s political demands. Without significant
direct subsidies, Central Asian countries will not see any advantage to integration with
the Eurasian Union; the same applies to all other Soviet successor states (see Chapter
4). And Russia’s economic and financial perspectives after the Ukraine crisis, diminished
by Western sanctions and even more by the downturn in oil and gas prices, are not very
bright and would hardly enable Moscow to give fundamental budget support to poor
and underdeveloped prospective members like Tajikistan. Against this background of
continuity and change, one could argue that President Putin’s plans are set up for failure.
Russia’s crumbling economy is less attractive to potential members than a buoyant
China and developing closer cooperation and integration with the EU’s single market.
Putin’s Crimean adventurism has also unveiled Russia’s neo-imperial agenda, effectively
dampening any political momentum the Eurasian Union may have had.
20 ‘The Other EU ’, The Economist, 23 April 2014.
21 Quoted in RFE/RL, 2015, ‘Kazak hstan Rejects Moscow’s Single Currency Proposal’, 22 April,
http://w ww.rferl.org/content/kazakhstan-rejects-moscvows-single-currency-proposal/26972232.html
(accessed August 2015).
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From Competition to Compatibility | Clingendael Repor t, October 2015
2.4 A highly uncertain future
The fact that this is a form of integration driven from the top down and based primarily
on Russia’s wishes, with the other EEU member states playing along only as far as
they deem it to be in their own short-term interests, raises some pertinent questions
about the future of this new institution. This is even more the case when seen against
the background of the internal political trends in Russia, leading to more self-isolation,
autarchy and a new form of holding together regionalism. Furthermore, in the short
to medium term, succession struggles are to be expected in all of these autocratically
governed EEU member states. Even in Russia, the jury is out as to how long the centre
will hold under the present circumstances. All this leads to the conclusion that the
future of the most ambitious post-Soviet integration project to date is highly uncertain.
The political crisis around Ukraine, along with the economic and financial downturn in
Russia, only add to this uncertainty.
Table 1 Regional integration initiatives and organisations in the post-Soviet space
INITIATIVE/ORGANISATION PARTICIPANTS STATUS
CIS (1991) AR, AZ, BL, GE (withdrew 2008),
KA, KY, MD, RF, TA, TU, UA, UZ
Active
Customs Union (1992) BL, KY, TA, UZ Abandoned
Economic Union (1993) CIS members (except UA) Abandoned
Free Trade Area (1994) CIS members (except RF and TU) Relaunched in 1999
Central Asian Union (1994) KA, KY, UZ, TA (joined 1998) Renamed Central Asian Economic
Union (1998); Transformed into
CACO (2002)
Customs Union (1995) BL, KA, R F KY (joined 1997),
TA (joined 1998)
Transformed into EurAsEC (2000)
Shanghai Five (1996) China, KA, KY, RF, TA, UZ
(joined 2001)
Transformed into SCO (2001)
GUAM (1997) AZ, GE, MD, UA, UZ (joined 1999,
withdrew 2005)
Active; renamed GUAM
Organisation for Democracy and
Economic Development (2006)
Free Trade Area (1999) CIS members
(except RF and TU)
Relaunched in 2011
EurAsEC (2000) BL, RF, KA, KY, TA, UZ (joined
2006, withdrew 2008)
Terminated upon inception of EEU
SCO ( 2001) China, KA, KY, RF, TA, UZ (India
and Pakistan to join in 2016)
Active
CACO-Central
Asian Cooperation
Organisation(2002)
KA, KY, TA, UZ, R F (joined 2004) Merged with EurAsEC (2006)
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From Competition to Compatibility | Clingendael Repor t, October 2015
INITIATIVE/ORGANISATION PARTICIPANTS STATUS
Collective Securit y Treaty
Organisation (2002)
AR, BL, KA, KY, RF, TA Active
Common Economic Space
(2003)
BL, RF, KA, UA Abandoned
Eurasian Customs Union
(2007)
BL, RF, KA Active (within EurAsEC)
Free Trade Area (2011) AR, BL,KA, KY, MD, RF, TA, UA Active
Single Economic Space
(2012)
BL, RF, KA Active (within EurAsEC)
EEU (2015) BL, R F, KA, AR, KY Active
Adapted from Dragneva, R. and Wolczuk, K. (eds.) 2013. Eurasian Economic Integration- Law,
Policy and Politics, Cheltenham, Edward Elgar
N.b.: AR: Armenia; AZ: Azerbaijan; BL: Belarus; GE: Georgia; KA: Kazakhstan; KY: Kyrgyzstan;
MD: Moldova; RF: Russia; TA: Tajikistan; TU: Turkmenistan; UA: Ukraine; UZ: Uzbekistan.
19
3 The Eurasian Union: gaps
between theory and reality
3.1 Legal foundations: setting the stage for confusion
The Eurasian Union’s post-Soviet opacity becomes evident when one tries to read the
organisation’s founding legal documents. The Treaty of the Eurasian Economic Union
(signed in Astana on 29 May 2014) set the stage for confusion by declaring that the law
of the Union comprises the treaty itself, all international agreements within the Union
and by the Union with third parties, as well as decisions and regulations emanating from
the Eurasian Union’s institutions. How could this possibly go wrong?
After the pompous signing ceremony in Astana, observers asked whether this new
treaty actually changed anything, apart from the name of the organisation. Two of the
Eurasian Union Treaty’s four chapters (Chapter Two ‘Customs Union’ and Chapter Three
‘Single Economic Space’) were simply copied from existing agreements among the
same members, with a first chapter added to rename existing institutions and agencies.
Although the fourth chapter (‘Transitional Provisions’) offered vistas of deepening
integration, these new initiatives were all built on the foundations of unfinished
and/or failed integration efforts from the recent past (see Chapter 2 of this report).
The Eurasian Union Treaty envisages cooperation and integration in a vast array of policy
areas, including the liberalisation of the gas and oil market (an initiative deeply affecting
Russia’s interests, scheduled for 2025), the harmonisation of legislation in the financial
sector, the creation of a financial market regulator y body and the liberalisation of the
construction sector. Moreover, a common electricity market is planned for 2019, as well
as a common market for pharmaceuticals (by 2016). The Eurasian Union Treaty also
envisages intensive cooperation on the free movement of labour as well as agreement
between member states on certain macroeconomic standards, including the level of
inflation, budget deficits (3 percent of GDP), and a limit on foreign debt (50 percent
of GDP).
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From Competition to Compatibility | Clingendael Repor t, October 2015
Clearly, Eurasian Union members have taken for granted that the legal basis of their
new institution has numerous gaps and inconsistencies, as it is built upon an existent
ramshackle Customs Union.22 A quick overview of the decision-making procedures and
competences of the institutions indicates the level of uncertainty of the new Union.23
3.2 Eurasian Union structures: the vertical preserved
As indicated above, most Eurasian Union institutions are rebranded versions of existing
Customs Union structures. The Supreme Eurasian Economic Council is the highest
decision-making body of the new Union. Resembling the design of the EU’s European
Council, it comprises the heads of state of member states, assembles no less than
once a year, and takes decisions by consensus. The Supreme Council takes all long-
term, strategic decisions, including the appointment of members of the Cour t and
the Commission (see below). The Supreme Council is the pinnacle of the Eurasian
Union’s power pyramid, and its decisions override those of the Commission and the
Intergovernmental Council (see below) .
The Intergovernmental Council is composed of the prime ministers of member states,
taking decisions by consensus. The Intergovernmental Council serves as a link between
the Supreme Council and a more technocratic Commission (see below). Still, the
Intergovernmental Council can, in principle, overrule Commission decisions. The Eurasian
Economic Commission is the primary executive body of the Eurasian Union, with
permanent headquarters in Moscow. Like its namesake in Brussels, the Commission
operates on a vast scope of policy areas, from tariffs, customs and technical regulations,
to macroeconomic policy, labour migration and the financial market. As the flowchart of
the decision-making processes in the Eurasian Union indicates, the Commission consists
of a Board and a Council. The Board (composed of 12 representatives, three from each
member state including Armenia plus two from Kyrgyzstan) is the most technocratic,
non-political body within the Eurasian Union’s flourishing bureaucracy. Its officials are
(supposed to be) independent, not taking orders from their national capitals (who have
appointed them into the Board). Decisions are taken by qualified majority (two-thirds of
votes), except for so-called ‘sensitive issues’, a catch-all category defined by the Union’s
Supreme Council (article 18). Decisions on ‘sensitive issues’ are made by unanimity.
The Council (of the Commission) consists of deputy prime ministers of member states;
after the expansion, all its decisions will be made by unanimity.
22 Knobel, A. 2014. ‘Eurasian Union: a Name Change or Something Bigger’ (in Russian) , Forbes, June 2,
http://www.forbes.ru/mneniya-column/gosplan/258 949-evraziiskii-soyuz-smena-nazvaniya-ili-chto-
bolshee (accessed May 2015) .
23 This task is becoming even more important, considering that the tex t of the Treat y on the EEU website can
be found only in Russian. Other documents referred to in this chapter (such as the EEU Cour t Statute) are
appended to the treaty and are available via the link.
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From Competition to Compatibility | Clingendael Repor t, October 2015
Chart 1 Decision making in the Eurasian Union
The issue is submitted to the Supreme
Eurasian Economic Council
The issue is submitted to the
Council of the Commission
The issue is submitted to the Board
The departments examine the
initiatives within their competency
The Supreme Council takes decisions
on important issues by concensus
Decicions
become
part of the
legal framework
of the Customs
Union and
the Single
Economic Space
Supreme Eurasian
Economic Council
Council of the Commission
Board of the Commission
17 consulting bodies
of the Commission
23 departments bodies
of the Commission
5
4
3
1
2
The Council takes decisions by
concensus on issues within its authority
The Board takes decisions on issues by
qualified majority voting in compliance with
the Treaty on the Eurasian Commission
National Governments
Member states
review the issue
and make their
observations
Source: Wikipedia
Decision making within the Eurasian Union mirrors the administrative systems of
its member states, and is firmly centralised (or ‘vertical’). This implies a top-down
hierarchy, all the way from the Supreme Council to the Commission’s administrative
departments. Decisions taken by lower-level bodies may always be overruled by a
superior organisation, and all unresolved, ‘sensitive issues’ are reserved for decision
making at the highest political level. Apart from the Board, all decisions within the
Eurasian Union are strictly consensus-based. This may well be workable with a limited
number of members, but is bound to become more of a burden after future enlargement
of the Union. For the time being, the course of integration largely depends on Russia’s
commitment to drive this process forward, its political will to put pressure on reluctant
member states, and the extent of its economic and financial means to reward countries
demanding compensation.
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Regardless of these complications and caveats, the ver y creation of the Eurasian
Union is bound to give the post-Soviet (re-) integration process some momentum, if
only because it ought to improve the technocratic and technical competences of the
organisation. Once political will at the top level is generated (still a big ‘if’), Eurasian
integration may well move forward steadily. Although the Eurasian Union’s structure is
vertical, it is also straightforward enough to avoid the endless proliferation of ambiguous
and half-baked agreements such as those of the past. The achievements of the Customs
Union and the Eurasian Union (which include the elimination of customs controls,
tariffs and non-tariff barriers, the creation of common external trade tariffs, and the
harmonisation of regulations and norms between member states) already demonstrate
that the new set-up may work more or less efficiently, contingent upon enduring
political will in all capitals (and Moscow particularly). The opposite is also true: without
consensus at the highest political level, the Eurasian Union will remain toothless and
unable to pursue its integrationist agenda.
3.3 ‘East-West’ sanctions: the Eurasian Union ignored
One of the Commission’s key functions is monitoring the implementation by individual
member states of the Eurasian Union’s legal provisions. In case of non-compliance,
the Commission is supposed to notify the member state in question about the measures
that need to be taken. The Commission is thereby set up to become the ‘guardian of
the treaties’ (a role akin to the European Commission with the EU). In case of member
state defiance, the Commission is to submit a complaint to the Eurasian Union Court
(see below), a scenario that is yet to occur. Compliance with the Union’s many rules and
regulations is an issue of particular attention, as it is indicative of the new structure’s
robustness.24 The recent so-called ‘sanctions war’ between Russia and the West
(which took off after the Ukraine-cum-Crimea crisis in 2014) offers some insights into
the Eurasian Union’s power and future.
In August 2014, in response to Western sanctions against Russia’s annexation of the
Crimea and its support for separatists in Eastern Ukraine, Moscow imposed a series
of countersanctions, comprising a range of agricultural products from the EU and the
United States (as well as from Norway and New Zealand). These embargoes were
unilaterally imposed by Russia without going through the formal motions of acquiring
official permission from the Customs Union authorities. This demonstrated a clear lack
of Russian commitment to the official objective of countering the West with a cohesive
Eurasian response. President Putin was aware that these countersanctions would never
24 Dragneva, R . and Wolczuk, K. 2014. ‘Eurasian Economic Int egration: Insti tutions , Promises and Faultlines’,
Geopolitics of Eurasian Economic Integration, LSE Spec ial Repor t, 10. http://www.lse.ac.uk /IDEAS/
publications/report s/pdf/SR019/SR019-Dragneva-Wolczuk.pdf (accessed May 2015).
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From Competition to Compatibility | Clingendael Repor t, October 2015
get the green light of the Customs Union’s other members, who now saw themselves
compelled to engage in the illegal re-export of Western goods (most notably through
Belarus).25
Despite initial claims from Eurasian Union leaders that the Union’s rules of origin would
be strictly enforced, Belarusian agricultural impor ts from the EU (and the US) soared –
typically of ‘non-Belarusian’ products like salmon, shrimp and kiwis. These schemes of
bypassing Russia’s counter-embargo against the West through Belarus and Kazakhstan
further undermined Moscow’s authority. After several months of indecision, Russia
countered (in November 2014) by announcing an official transit ban of these Western
products. In a classical move, Russia’s federal agricultural controlling agency declared
that Belarusian meat and milk products were ‘in violation of sanitary norms’, and were
hence prohibited from entering the Russian market. This revealed a fundamental flaw
in the Customs Union (and later Eurasian Union) design, as phytosanitary norms were
supposed to be harmonised among member states. Lacking an overarching controlling
agency, Eurasian Union members were left to enforce existing rules in an arbitrar y
fashion, even in retaliation against each other if need be.26 Belarus responded (in
December 2014) by restoring customs controls on its borders, even though the rhetoric
of adherence to the Customs Union rules continued unabated.27
As late as March 2015, Commission member Vladimir Goshin disclosed that the
Commission was in the process of preparing a draft agreement to regulate the
consequences of unilateral sanctions imposed by one of its members (in this case
Russia). Goshin suggested that there was no unity in the Commission on how to
handle Russian countersanctions using existing Eurasian Union rules and regulations,
pointing out that the Commission and Court (of the Eurasian Union) were consulting on
a possible way out of this delicate and painful conundrum.28 Still, the Commission did
not publicly react to Moscow’s fundamental challenge to the principles of the Customs
Union. Even today, the conflict remains unresolved, as regular sharp pronouncements
of Belarusian officials show.29 Kazakhstan, which equally fell out with Russia, also
regularly airs its discontent with Moscow’s unilateral countersanctions against the West,
and has at times resorted to open resistance. For example, when Rosselkhoznador
25 Knobel, A. 2 014. ‘The Impossible Trinity: How Russian Sanctions are Destroying the Eur asian
Union’ (in Russian) , Forbes, 2 December. http://www.forbes.ru/mneniya-column/gosplan/274627-
nevozmozhnaya-troitsa-kak-rossiiskie-sanktsii-razrushayut-tamozhennyi (accessed May 2015) .
26 Ibid.
27 ‘Not Caught – not a cheese’ (in Russian), Kommersant, 9 December 2014.
28 ‘Disagreements of the member-states about t he sanctions will be settled in c ourt’ (in Russian), ej.by,
6 March 2015.
29 ‘Kobyakov has expre ssed dissatisfaction wit h the work of t he Eurasian Economic C ommission’ (in Russian),
Nasha Niva, 7 Februar y 2015.
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(Russia’s Federal Service for Veterinary and Phytosanitar y Surveillance) enacted
a ban against the import of Norwegian salmon to Kazakhstan in August 2015, the
Kazakh Ministry of Agriculture refused to introduce it.30 As one economic analyst told
The Astana Times, ‘Russian counter-sanctions in food products can be expected to,
on balance, have an overwhelmingly negative overall impact on Kazakhstan through
potential food price inflation and domestic supply risks[.]’31
3.4 The Eurasian Union Court: signs of life
The Court of the Eurasian Union is housed in a stately brick dwelling in Minsk’s
Kirova Street. This Court was not created from scratch, but is the successor of the
Eurasian Economic Community (EurAsEC) Court. The EurAsEC Treaty was signed by
(the presidents of) Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan in Astana
on 10 October 2000. The EurAsEC Court was created much later and has functioned
only since January 2012. The new Eurasian Court consists of eight judges (two from
every member state except – for the moment – Kyrgyzstan) , who have been appointed
for a period of nine years; most present judges have a track record in the (former)
EurAsEC Court.
The competences of the Eurasian Union Court are enumerated in Chapter 4 of its
statute. Crucially, the Court can act on complaints not only from member states but
also from private actors registered either within or outside the Eurasian Union. The
Court’s main task is to assure compliance with the rules and regulations adopted
by Union authorities, a task that has proven extremely difficult given the rather poor
track record of the Court’s forerunners. The Court’s decisions are legally binding in all
member states, a novelty in a post-Soviet legal framework used to carefully guarded
national sovereignty. Yet (and as usual), despite this new, ambitious start, the Court’s
powers have actually been curbed in comparison with its (EurAsEC) predecessor.
For example, the Court lost the power to issue advisory opinions on issues pertaining
to interpretations of Eurasian Union agreements. The new Court now shares with
member states the authority to interpret the Eurasian Union Treaty and subsequent
agreements. This undermines the Court’s clout, especially as judicial branches in
all Eurasian Union member states are still plagued by corruption and nepotism. This
diminishes the chances for private actors to invoke Eurasian Union law in defending
their interests in the national courts of Union member states. Furthermore, the Eurasian
Union Treaty limits the scope and impact of the Court’s decisions, which from the onset
30 See http://365info.kz/2015/08/rybnye-sankcii-rossii-otkazalis-podderzhivat-v-kazaxstane/
(accessed September 2015) .
31 Quoted in Michel, C. 2014. ‘Russia Sanc tions Hit C entral A sia Hard’, The Diplomat, 2 October,
http://thediplomat.com/2014/10/russia-sanctions-hit-central-asia-hard/ (accessed August 2015) .
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caps the Court’s ability to extend its influence and strengthen the integrationist impulse
within the organisation (which the EU’s European Court of Justice has done with great
enthusiasm and success).32
The record of the Court so far has been mixed. It has avoided the dreaded scenario of
becoming an instant ‘ghost institution’, as it has decided upon several cases in favour of
a private actor against a member state. Over the past four years (as of May 2015), the
EurAsEC and Eurasian Union Courts combined have taken only 21 decisions, 15 of which
related to cases where a private company sued a Eurasian Union member state. Only in
four cases did the Court rule in favour of a private claimant (three times in favour of a
Russian company). In all the cases where an international suitor was involved – that is,
Novokramatorsk Machine Building Plant (Ukraine), Angang Steel Co (China), Graphite
India Limited and HEG Limited (India), and Volkswagen (Germany) – the Court ruled in
favour of the Eurasian Union’s Commission.33
Clearly, the fact that the Court has ruled on occasion in favour of private companies is
encouraging, indicating its independence. Still, most of these ‘private’ victories were
achieved back in 2012-13, and no company based outside the Eurasian Union has so far
won a case before the Union’s Court. Given that most of these ‘foreign’ cases have been
brought to the Court by companies from the BRICS countries and the EU, the question
of the new Cour t’s authority and neutrality becomes pertinent. Its track record remains
mixed, but also short, which makes it premature to speculate on the Court’s future.
It is, however, encouraging that post-Soviet leaders have decided to harmonise the
regulation of technical procedures to a permanent professional bureaucracy within an
established organisation like the Eurasian Union. It remains to be seen whether this
modest supranational institution will hold its own in the face of disagreements between
member states. Only if the political leaders of the Union can muster the collective will
to sustain or even deepen Eurasian integration, will institutions like the Court establish
their authority. At the same time, the (authoritarian) elites’ political support for Eurasian
integration remains contingent upon the domestic (economic) circumstances within
all member states (and Russia in particular). In Chapter 4 we put for ward a concise
overview of the motivations and aspirations of existing Eurasian Union member states,
and examine which other countries might join this Union, and why (or why not).
32 Borovikov, E. and Danilov, I. 2015. ‘B2B: Balancing the Cour t of the Eurasian Economic Union’, The M oscow
Times, May 17. http://www.themoscowtimes.com/article/b2b-balancing-the-cour t-of-the-eurasian-
economic-union/517551.html (accessed May 2015).
33 EurAsEC Court decisions may be found here; EEU C ourt decisions here.
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3.5 Institutional weakness and intra-EEU convergence of
standards, rulesandregulations
The unclear division of competences between the supposedly supranational Eurasian
Economic Commission and national institutions in EEU member states which are
supposed to implement decisions raises questions for third parties about whom to
address and with whom to work in the Eurasian Economic Union. This is even more
the case where much depends on the political will of the leadership of member states,
especially Russia.
Insofar as the Eurasian Economic Commission and its subordinate bodies work on (new)
standards, rules and regulation within the Eurasian Union, it would seem useful for
competent bodies within the EU to at least exchange information and attempt to avoid
the emergence of deeper cleavages between EEU and EU in those fields. After all, the
ultimate aim should be for the EU to stimulate approximation and convergence, in order
to achieve less complicated trade relations.
However, as the Eurasian integration process is highly politicised, even more so when
discussing Ukraine (as EU-Ukraine-Russia trilateral discussions show), prospects for a
more formal and institutionalised dialogue between the EU and the EEU remain bleak.
Only a fundamental change of policy in Moscow could improve this and lead to a return
to a more constructive EU-Russia dialogue on the implementation of the road maps of
the four ‘Common Spaces’ (especially the Common Economic Space) and the EU-Russia
Modernisation Partnership, which at present seems to have been more or less given up.
27
4 The Eurasian Union: current
and future membership
4.1 Introduction: ‘With friends like these’
Russia has been the main driving force behind all initiatives to re-integrate the post-
Soviet space; the new Eurasian Union is no exception. President Putin launched his
plan during the campaign for his re-election in 2011 to highlight Russia’s future place in
the world as a bridge between the EU and China.34 By allying with its closest par tners,
Moscow could establish itself as a new Great Power in a multipolar world order. Putin
never indicated whether these ‘close partners’ shared his vision, and basically assumed
that what was good for Russia would also be good for the other former Soviet states,
and that Moscow could deal with Brussels or Beijing on their behalf.
This Russian post-imperial mentality of entitlement to (at least regional) Great Power
status did not take into account the fact that more than 20 years have passed since
the disintegration of the Soviet Union.35 It reflects President Putin’s view that the fall of
the Soviet empire is ‘the greatest geopolitical catastrophe of the 20th century’.36 Over
the past decades, the Soviet successor states have developed their own identity and
sovereignty, which do not necessarily coincide with those of Russia. As far as possible,
they all developed multi-vector foreign policies, connecting them to either the West
(mainly the EU), or the East (mainly China); in some cases to both. Relations with Russia
remained impor tant, but were no longer the only links to the outside world, into which
they gradually became more integrated. Twenty years has also proved long enough
to develop their own identities and historical narratives about their place in the world,
irrespective of what Russia thinks about their statehood.37
34 Putin, V. 2011. ‘A new integration project for Eurasia: The future in the making’, Izvest ya, 3 October,
http://www.russianmission.eu/en/news/article-prime-minister-vladimir-putin-new-integration-project-
eurasia-future-making-izvestia-3- (access ed August 2015).
35 Lo, B. 2015. Ru ssia and t he New World Disorde r, Washington DC, Brookings Institution Pr ess.
36 Quoted from Putin, V. 2005. St ate of the nati on addres s to Parlia ment, 25 April.
37 President Putin clearly indicated at a summit meeting with N ATO leaders in Bucharest that he did not
consider Ukraine a r eally independent st ate, just as later on he doubted Ka zakhst an’s independent
statehood, prompting Kazakh Pre sident Nazarbayev t o state that his country could withdraw from the
Eurasian Union if its sovereign rights were not respected.
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4.2 Russia: geopolitics meets economic reality
During his first term in office (2000-04), President Putin was mainly preoccupied with
restoring internal order within the Russian Federation through the construction of a real
power vertikal, economic and financial stabilisation (very much helped by rising energy
prices) , and building some form of a social contract with Russian citizens by which
they would accept some limitations on political freedoms in exchange for a modicum
of stability and economic growth. Gradually a new hybrid regime was established, in
which people with backgrounds in security services and the armed forces (the so-called
‘siloviki’) assumed a pre-eminent place and became oligarchs in their own right.38 This
new political elite aimed for a redeemed Russia, accepted as an equal partner by the
US and the EU. To this end, Russia was still willing (at the beginning of the millennium)
to accept closer integration into Euro-Atlantic structures, envisioning itself as part of
a Common European Home (as originally articulated by President Gorbachev), based
on shared norms and values.39 Even as late as 2005, Russia agreed to cooperate with
the EU on numerous so-called ‘Common Spaces’, linking Russia’s economy and society
more closely to European frameworks and aimed at approximation with EU norms and
standards. As long as the ‘near abroad’ moved in the same direction as Russia, closer
ties between these countries and the EU were not blocked by Moscow.
More than 10 years later, however, Moscow’s position has markedly changed. Explicit
anti-Western rhetoric is rampant in Russia, and the main debate is about the country’s
‘pivot to Asia’ as part of a strategy to establish a multipolar world order with Russia as
one of its dominant centres. Competition in Russia’s ‘near abroad’ (what the EU tends to
call the ‘shared’ or ‘common neighbourhood’) over Ukraine, has triggered a major crisis
in the heart of Europe. Finding new common ground between the West and Russia has
become one of the main challenges for the EU in its relationship with what used to be its
main ‘strategic partner’ in the East. How did we ever get to this point? When did Russia
start fundamentally changing its policies towards the West? And how do Russian plans
for a Eurasian Union fit in this context?
Two developments have fundamentally changed Russia’s perspectives on relations with
the West, including the EU.
First, the so-called ‘colour revolutions’ star ting in Georgia and Ukraine (2003-04),
leading up to Ukraine’s Maidan revolution of 2013-14. To Russia’s political elite, the social
revolutions are part of a US-led and EU-supported conspiracy, aimed at weakening
Russia by toppling pro-Moscow regimes. Strategies to promote democracy and support
38 Soldatov, A. and Borogan, I. 2010. ‘Russia’s Ne w Nobilit y’, Foreign Affairs, Sept/Oct, 89(5); Dawisha, K. 2014.
Putin’s k leptocracy – Who Owns Russia ?, New York, Simon & Schuster.
39 See for example Putin’s speech at the German Bundestag in 2001.
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for civil society in the region are considered the West’s main instruments to weaken
Russia’s hold on its ‘near abroad’. An increasing number of Russian policy makers
even seem to believe that the West’s ultimate aim is ‘regime change’ in Moscow itself.
For example, Foreign Minister Sergey Lavrov argued in 2014 that, ‘As for the concept
behind the use of coercive measures, the West is making clear it does not want to force
Russia to change policy, but wants to secure regime change.’40
Since Russia started formulating its own concept of ‘sovereign democracy’ in 2006,
Moscow has been working actively to counter all democracy-promoting activities by
Western donors, most recently by adopting legislation forcing Western-financed NGOs
to register as ‘foreign agents’ or allowing prosecutors to ban ‘undesirable’ foreign and
international organisations from operating in Russia. Moscow realises (and seems to
accept) that the West will not acknowledge Russia as a genuinely equal partner as long
as it does not fully comply with Western notions such as liberal democracy and the rule
of law. Russia’s normative distance from the West has stimulated Moscow to invest more
heavily in the Sino-Russian relationship (see below).
Second, Russia’s failure to complete its political and economic transition (called
‘modernisation’ under President Medvedev) and integrate more fully into a globalised
(albeit Western-dominated) world order, has led to widespread societal disappointment,
and triggered large-scale demonstrations on the eve of Putin’s return to the Kremlin in
2012. Russia’s half-hearted attempts to bring its economic, political and societal system
in line with the Western/EU mainstream (based on the rule of law), failed to convince
most of the world that Russia was determined to play by the rules. The number of
arbitration cases brought forward against Russia in the first few years of its membership
of the World Trade Organisation (WTO) , and Russia’s subsequent flouting of a range
of international legal obligations during the Ukraine crisis, changed the predominant
Western view that Russia could eventually develop into a responsible regional and
global player.
As long as the Russian economy remains mainly dependent on the export of energy
resources, it is only logical that Russia tries to build on remaining ties with other former
Soviet states, whose economies are often significantly outmoded and unreformed,
and hence less competitive in today’s global market. In its strategic backyard, Russia
feels comfortable to play power games, using energy prices and labour regulations
(important, given the value of remittances; see below) to manipulate the foreign policies
of its regional ‘partners’, particularly the smaller ones. Membership of the Eurasian
Union has forced these ‘partners’ to adopt Russia’s higher external tariffs, agreed upon
40 Devit t, P. 2014. ‘Lavrov accuses West of seek ing ‘regime change’ in Russia’, Reuters, 22 November.
http://www.reuters.com/article/2014/11/22/us-ukraine-crisis-idUSKCN0J609G20141122
(accessed August 2015).
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when Russia entered the WTO (2012). From an economic perspective, internal Eurasian
integration has proven much easier than modernising and integrating into the global
economy, understandably so given how this is stimulated and controlled in a top-down
manner by the largely autocratic establishments in the countries concerned.
As a result, competing regionalisms gradually became the second-best option, even
when it meant a (temporary) withdrawal from a broader pan-European integration,
for which the EU sets the rules whether Russia likes it or not. In the meantime,
protectionism prevails in Russia and anti-Western food sanctions are partly used
for import substitution policies. A deliberate policy of ‘renationalisation of the elite’
(making Russia less vulnerable to Western influence), stimulating re-investment of
Russian capital, which has fled the country in the past decade, and studying closely
China’s efforts at controlling the internet all fit into a Russian withdrawal from Western-
dominated economic and financial structures.
The West’s growing scepticism about Russia’s future prospects has, in turn, encouraged
and emboldened the regime’s existing anti-Western sentiments. Moscow’s ‘pivot to Asia’
goes hand in hand with its current alienation from the US and the EU.41 More specifically,
Russia’s earlier anti-Americanism (as prominently displayed in President Putin’s speech
to the Munich Security Conference in 2007),42 has now been widened to include the
EU as well. Moscow’s anti-EU views are often framed within a discourse of ‘clashing
civilizations’, where the EU’s post-modernity challenges Russia’s ‘unique character’ and
its traditional values (increasingly used to bolster the present regime by attempting to
ride the wave of Russian nationalism) .
In 2013 President Putin argued that a ‘serious challenge to Russia’s identity is linked to
events taking place in the world. Here there are both foreign policy and moral aspects.
We can see how many of the Euro-Atlantic countries are actually rejecting their roots,
including the Christian values that constitute the basis of Western civilisation.’ This,
Putin suggested, also explains why the project of establishing a Eurasian Union is so
important: ‘The 21st century promises to become the century of major changes, the
era of the formation of major geopolitical zones, as well as financial and economic,
cultural, civilisational, and military and political areas. That is why integrating with our
neighbours is our absolute priority (…) The Eurasian Union is a project for maintaining
the identity of nations in the historical Eurasian space in a new century and in a new
world. Eurasian integration is a chance for the entire post-Soviet space to become an
41 Lo, B., op.cit.; Cadier, D. and Light , M. (eds .) 2015. Russia’s Foreign Policy. Ideas, Domestic Politics and
External Relations, Basingstoke, Palgrave Macmillan; Giles, K . et al. 2015. ‘T he Russian Challenge’,
Chatham House Report, June.
42 Putin, V. 2007. Remarks at 43rd Muni ch Conference on Security Policy, 12 February.
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independent centre for global development, rather than remaining on the outskirts of
Europe and Asia.’43
This explains why the choice of the EU by countries like Georgia, Moldova and, most
recently, Ukraine, is considered a challenge to Russia’s neo-imperial strategy and
“civilisational” mission. This also largely explains Russia’s renewed focus on ‘holding
together regionalism’ and the importance of the Eurasian Union project.44 This is also
clearly formulated in Russia’s Foreign Policy Concept (2013), where close ties with CIS
partners are considered a key priority.45 Russia, therefore, forced Ukraine and Armenia
to choose between an EU-led European integration and a Moscow-led Eurasian
integration.
Moscow’s preferred narrative seems to be an emerging ‘Game of Unions’, although
opportunities for compromise remain, most notably in the context of a Greater
European free trade area (see Chapter 6 for fur ther analysis).46 By now pushing the
Eurasian Union as a credible counterpart-cum-competitor of the EU, Russia has chosen
(temporarily) the path of isolation, protectionism and stronger autarky in as far as this is
still possible. All this seems to be accompanied by a neo-imperial ‘gathering of former
Russian or Soviet lands’ and reconstituting previously integrated industrial complexes
and structures dating from Soviet times. However, the key question for Russia is: will
this centre hold, when will it come under stronger pressure from a society that has
grown used to relatively good economic performance and stability? Protecting the
present regime against such pressures becomes more important than liberalising the
economy and society. And playing the nationalist and anti-Western card has become
indispensable and inescapable, thus limiting Russia’s foreign policy options even further.
Basically, Russia has come full circle from star ting to become a post-imperial power, as
described in Dmitri Trenin’s book The End of Eurasia,47 to an old-style neo-imperial power
where Great Power considerations are more important than pursuing more open policies
aimed at better adapting to the conditions of Bobo Lo’s present ‘new world disorder’.
According to Lo, Russian foreign policy can only be effective if it adapts to changing
conditions in a globalising world order. Otherwise, stagnation will undoubtedly follow.48
43 Putin, V. 2013. Speech at the Valdai Group plenar y meetin g, 19 Septemb er http://russialist.org/transcript-
putin-at-meeting-of-the-valdai-international-discussion-club-partial-transcript/ (acc essed August 2015) .
44 Libman A., Vinokurov E. 2012. ‘Holding Together Regionalism and Interac tion of Func tional Bur eaucrac ies’,
Review of International Political Economy, 19(5 ), 867- 894 .
45 Light, M . 2015. ‘Russian Foreign Policy Themes in Official Documents and Speeches : Tracing Continuity and
Change’, in eds. Cadier, D. and Light, M., op.cit.
46 Putin, V., Izvestya, op. cit.; see also Merkel’s Davos 2015 remark s: Schumacher, E., op . cit.
47 Trenin, D. 2002. T he End of Eura sia: Rus sia on the Border Bet ween Geop olitic s and Globa lization ,
Washington DC, Carnegie Endowment for International Peace.
48 Lo, B., op.c it.
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4.3 Kazakhstan’s choice for Eurasianism
Among the current members of the Union, Kazakhstan fully deserves the label of front-
runner in the drive towards Eurasian integration.49 Kazakhstan’s longstanding president,
Nursultan Nazarbayev, was the first to come up with the idea of a Eurasian integration
project – as early as 1994 envisaging the creation of a Customs Union of post-Soviet
states.50 In his written work, Nazarbayev developed a rather unique Kazakh version of
‘Eurasianism’, comprising a vision of his country as a geostrategic bridge between East
(notably China) and West (the EU) . This version of Eurasianism is embedded in the
notion of a ‘multi-vector’ strategy, aimed at guarding the country’s independence and
sovereignty, and legitimising the domestic and foreign policy goals of an autocratic but
pragmatic political elite.51
Domestically, the notion of Eurasianism offered a set of values aimed at promoting
post-independence integration and peaceful coexistence in a diverse country otherwise
prone to fragmentation. The concept of a Eurasian identity was meant to have a
‘significant calming influence on the tensions in society’. At the regional level, Kazakh
Eurasianism aimed at fostering pragmatic cooperation with all relevant actors, ranging
from key partners Russia and China to all other Central Asian countries. Over the years,
Kazakhstan’s multi-vector approach has gradually changed due to its ‘pivot to China’
(see below), which (as a corollary) has reduced its concerns about upsetting Russia.
Relations with other Central Asian countries have remained largely unchanged, with
Kazakhstan prioritising intra-regional cooperation while leaving the overt ‘bullying’
towards deeper integration to Russia’s experienced leaders.52 Finally, unlike the rather
adversarial Russian version, Kazakh Eurasianism proved compatible with a markedly
pro-Western posture, leading to the steady development of relations with Brussels.
Over the years, the EU has become Kazakhstan’s largest trade partner and the strongest
supporter of the countr y’s imminent WTO accession.53
Until recently, Astana’s multi-vector strategy remained underdeveloped and
economically ineffectual, as integration projects like the Central Asian Economic Union
49 Satpaev, D. 2015. ‘Kazak hstan and the Eurasian Economic Union: The view from Astana’, ECFR Commentary,
12 January. http://www.ecfr.eu/ar ticle/commentary_kazakhstan_and _the_eurasian_economic _union_
view_from_astana395 (accessed June 2015).
50 Sultanov, B. 2015. ‘Kazakhst an and Eurasian integration’, Eurasian Integration - The view from within, 97-111,
eds. Dutkiewic z, P. and Sakwa, R., Oxon , Routledge.
51 Mostafa, G . 2013. ‘The concept of ‘Eurasia’: Kazakhstan’s Eurasian policy and its implications’, Journal of
Eurasian Studies, July, 4(2), 160-170.
52 MFA-Republic of Kazakhst an, 2014. Fore ign Policy Concept for 2014 – 2020. http://mfa.gov.kz/index.php/
en/foreign-policy/foreign-policy-concept-for-2014-2020-republic-of-kazakhstan (accessed June 2015)
53 Nazarbayev, N. 2014. ‘T he Next Chapter in Kazakhstan-EU Relations’, The Wa ll Street Journal, 7 October.
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failed (mainly due to lacking economic complementarity) and global trade ties (with
China and the EU in particular) advanced only at a sluggish pace. In contrast, economic
re-integration with Russia was prioritised and considered a matter of state survival.54
As mentioned above, Astana has always emphasised the exclusively economic nature of
both the Customs Union and the subsequent Eurasian Union, teaming up with Belarus
to counter Russian attempts at politicising integration. However, the reasons for joining
with the projects were mostly (geo)political. First, in light of the potentially destabilising
economic crisis and uncertainty about a post-Nazarbayev regime change, the Customs
Union was seen as a powerful tool to enhance regime legitimacy via improved
performance, with added potential to grant the powerful oil and gas lobbies cheaper
access to Russian and Belarusian pipelines (a promise yet to be fully met). Moreover, the
aforementioned multi-vectored approach was deemed unsuitable for properly defining
a Kazakh ‘civilisational’ identity, hence increasing the appeal of a clear Moscow-bound
integration strategy. Nevertheless, although Russia was chosen as the dominant foreign
policy vector, the other strands – EU/Western and China/Eastern – remained alive (if
quiescent), ready to resurface to redress any imbalance caused by the Customs Union/
Eurasian Union allegiance.
Initial enthusiasm for Russian-led Eurasian integration, justified by the expected
growth in trade and access to Russian pipelines, was soon replaced by disappointment
after it became clear that the Customs Union also brought economic and political
disadvantages.55 Most notably, the common external tariff approximation process was
tailored to Russian needs only and based on Russian tariffs agreed in the process of
Russia’s WTO accession. This resulted in a marked increase in Kazakhstan’s trade
barriers, the accumulation of significant trade imbalances with Russia, and damage
to the country’s small and medium-sized enterprises (SMEs). As a result, Kazakhstan
trade with its Customs Union partners dropped by 20 percent in 2014, and trade with
Eurasian Union members fell by 8 percent in January 2015.56 Since food prices rose
by a massive 23 percent, popular support for Eurasian integration remained modest,
and even provoked the small nationalist opposition party to raise its voice against the
regime, denouncing Nazarbayev for undermining Kazakh sovereignty. To many, neither
the Customs Union nor the Eurasian Union lived up to their promises, at least not for
the weaker, junior partners in the integration process. This understanding revamped
Kazakhstan’s commitment to its multi-vector strategy and hastened its pivot to China.
54 NB: Kazakhstan’s ethnic composition upon independence: 40 percent Kazakh, 38 perc ent Russian; today
66 percent Kazakh, 22 percent Russian.
55 Kassenova, N. 2012. ‘Kazakhstan and Eur asian Economic Integration: Quick Start, Mi xed Results and
Uncer tain Future’, IFRI Russie.Nei.Reports, no.14 (November), 18ss https://w ww.ifri.org/sites/default/files/
atoms/files /ifrikassenovakazandeurasianintegrationengnov2012.pdf (accessed June 2015).
56 ‘Kaz akhstan: Eurasian Union Trouble s Obvious as Putin Visits Ast ana’, EurasiaNet.org, 20 March 2015.
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Russia’s dire economic straits have accelerated this process.57 The rouble crisis has
driven many Kazakh enterprises out of business, as local buyers’ preferences shifted
towards cheaper Russian goods. As a result, bilateral trade has become imbalanced:
over the past year, Kazakh imports from Russia rose by 7.3 percent, while expor ts to
Russia dropped by 41.2 percent.58 Bilateral trade has also plummeted; Russia’s share in
Kazakh trade has fallen from almost 50 percent in 1995, to 30 percent of today’s imports
and just 9 percent of exports.59 Kazakhstan’s WTO membership (which will finally
become a reality some time in 2015) will only reinforce and accelerate the economic shift
away from Moscow. However, some Russian companies seem to have shifted their main
operations to Kazakhstan because of its better investment climate.
Politically, this strategic change became most visible with Kazakhstan’s backing of
Ukraine’s territorial integrity and its public and official lack of support for Russia’s neo-
imperialist agenda. Despite these trends, it remains to be seen whether Kazakhstan can
withstand Russia’s continued push for deeper political integration within the Eurasian
Union. For now, Astana still places its bets on a Eurasian multi-vector approach, built
around a ‘Grand Strategy’ to develop and maintain peaceful ties with all relevant
partners, in both West and East.60
Kazakhstan’s relations with China have traditionally been complex, but recent initiatives
illustrate Astana’s readiness to intensify ties with Beijing. A Special Economic Zone has
been established in Yili (in China’s Xinjiang region). This 200km2 zone, located in an
autonomous prefecture populated mainly by ethnic Kazakhs, is developing rapidly into
a bilateral trade hub. This initiative is part of China’s grandiose ambition to develop a
so-called New Silk Road ( ‘One Belt, One Road’), linking China to Europe through Central
Asia and the Middle East. So far, Astana has secured Chinese investment in as many
as 55 (mainly infrastructure) projects with a total value of US$ 53 billion, as part of a
drive to increase bilateral trade to US$40 billion by the end of 2015 (partly supported by
currency swaps on a bilateral basis).61, 62 Recent declarations on both sides emphasised
57 Kusznir, J. 2015. ‘Russia’s borders : Moscow’s long alliance with K azakhstan is str ong but not unbreakable’,
The Conversation, 20 January. http://theconversation.com/russias-borders-moscows-long-alliance-with-
kazakhstan-is-strong-but-not-unbreakable-36457# (accessed June 2015).
58 Lillis, J., 2015. ‘Kaz akhstan and Russia Trading Punches in Import-Expor t Row, EurasiaNet.org, 16 April.
59 Observatory of Economic Complexity, Kazakhstan. https://atlas.media.mit.edu/en/profile/countr y/kaz/
(accessed June 2015).
60 Mostafa, G., op . cit., p. 169.
61 ‘Kazakhstan, China : Close Neighbours t hat Build Mutually Beneficial Ties’, The Astan a Times, 5 M ay 2015.
http://ww w.astanatimes.com/2015/05/kazakhstan-china-close-neighbours-that-build-mutually-beneficial-
ties/ (accessed June 2015).
62 Tiezzi, S. 2015. ‘China’s Silk Road in the Spotlight as Xi Heads to Kazakhstan’, The Diplomat, 8 May.
http://thediplomat.com/2015/05/chinas-silk-road-in-the-spotlight-as-xi-heads-to-kazakhstan/
(accessed June 2015).
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the political and security benefits of closer ties, arguing, for example, that cooperation
on counterterrorism is possible due to the countries’ ‘shared values.’63
Table 2 Economic and political issues in post-Soviet space
AA/DCFTA
EU visa-free
travel
EEU
Quality of
democracy
Corruption
score
GDP per
capita (euros)
Separist
questions
Azerbaijan N N Y Not free 126 6,000 Nagorno-Karabakh
Belarus N N Y Not free 119 5,800 None
Ukraine Y N N Partly free 142 3,100 Luhansk, Donestk
(Crimea)
Georgia Y N N Partly free 50 2,700 South Ossetia,
Abkhazia
Armenia N N Y Partly free 94 2,600 Claim over
Nagorno-Karabakh
Moldova Y Y N Partly free 103 1,700 Transnistria
Source: Knott in EUROPP, 1 June 201564
Although relations with China are most promising and likely to undergo dramatic
change, it is the EU that has become Kazakhstan’s first trading partner (US$31 billion in
2014) and first foreign investor, representing over half of total foreign direct investment
in Kazakhstan.65 In January 2015, Kazakhstan became the first Central Asian partner to
conclude an Enhanced Partnership and Cooperation Agreement with the EU. This new
Agreement will replace the Partnership and Cooperation Agreement (PCA) in force since
1999. The Agreement’s nine sections (dealing with issues such as political dialogue,
shared foreign and security challenges, trade and business, as well as cooperation in the
area of justice, freedom and security), constitute a significant upgrade to the previous
document. Also, the ‘provisional application’ clause implies that the agreement will
be de facto enforced even before formal ratification procedures are completed, which
indicates Astana’s willingness to drive relations with the EU forward. This move towards
63 Ibid.
64 Knott , E. 2015. ‘Following the Riga summit , more realism is required over what the EU can offer its eastern
partners’, LSE EUROPP, June 1. http://blogs.lse.ac.uk/europpblog/2015/06/01/following-the-riga-summit-
more-realism-is-required-over-what-the-eu-can-offer-its-eastern-partners/ (acce ssed June 2 015).
65 European External Action Serv ice (EEAS) , 2015. Pres s release: EU and Kazak hstan in itial Enhanced
Partnership and Cooperation Agreement, 20 Januar y. http://eeas.europa.eu/statements-
eeas /2015 /150120_ 01_en. htm (ac cessed June 2015).
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the EU is an integral part of Kazakhstan’s multi-vector strategy, hedging against Russia’s
neo-imperialism and China’s economic high-handedness. It also illustrates Astana’s
pragmatism and its desire to promote its image as an independent, responsible and
dynamic international player.66
4.4 The hesitant trio: Belarus, Armenia and Kyrgyzstan
Belarus
The role of Belarus in the regional integration process can best be described as
‘reluctant bystander’, revealing a lack of commitment to both a Russian-dominated
Eurasian sphere and a liberal-democratic EU. Until the military conflict flared up in
Eastern Ukraine, Minsk had cautiously conducted an à la carte approach towards both
projects, prioritising its political ties to Moscow (i.e., the Union State), while maintaining
‘technical’ cooperation with its neighbours to the West. Russia’s annexation of Crimea
and the ongoing conflict in Ukraine has dramatically strengthened the security
implications of Belarus’ decision to join the Eurasian Union, turning it into an almost
existential choice. Given Belarus’ long-standing and close historical and cultural ties to
former soviet states, this step seems rational. But behind the rhetoric of kinship, stands
the main (and arguably only) trigger of Belarus’ allegiance to the Eurasian Union, which
is a quest for energy security and economic benefits. The Belarusian economy has
been hit hard by the financial crisis, which does not make it easier to realise Minsk’s
self-proclaimed role as a ‘Eurasian bridge’, especially as the EU and the Eurasian Union
remain worlds apar t.
Russia’s attempts to use the energy lever to control Belarus has had mixed results.
Moscow annually negotiates bilateral energy duties with Minsk in order to keep its
smaller neighbour in check.67 But President Alexander Lukashenko has proven to be
as hard-nosed and independent as his Kazakh counterpart, which became evident
when Belarus effectively vetoed any reference to ‘Eurasian integration’ in the Eurasian
Union’s founding treaty, which now mainly calls for Eurasian economic integration.68
Like Kazakhstan, Belarus prefers to keep its options open.
66 Tserts vadze, T. and A xyonova, V. 2013. ‘Trading values with K azakhs tan’, EUCAM, no. 32. http://www.
eucentralasia.eu/uploads /tx_icticontent/EUCA M-PB-32-Trading-values-KZ-EN_01.pdf (accesse d June
2015 ).
67 Astapenia, R. 2015. ‘Belarus and the Eurasian Economic Union: The view from Minsk’, ECFR Commentary,
January 7. http://www.ecfr.eu/article/commentary_belarus_ and_the_eurasian_economic_union_the_
view_from_minsk (accessed July 2015) .
68 A remarkable shift away from his initial ruthless hostility to nationalism – see Wilson, A. 2014. Ukraine
Crisi s- What it means for the West, New Haven, Yale UP, 179.
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But even the economic lure of the Eurasian Union is minimal to Belarus, given that
Kazakhstan and Armenia make up for as little as 1.5 percent and 0.05 percent of its
trade economy respectively.69 What is more, the Customs Union has, due to the process
of equalisation of prices, resulted in price hikes in several key consumer sectors, such
as food and fuels. Russia’s economic malaise has dented its image in Belarus, making
Moscow’s call to set up a currency union unappealing.70 As a result, public support for
Eurasian integration is dwindling, opening up opportunities for the EU to consolidate
its image as a viable Western alternative to Moscow.71 Despite the ostensibly ‘legal’
incompatibility of the EU’s Deep and Comprehensive Free Trade Agreement (DCFTA)
and the (Eurasian) Customs Union, pragmatic opportunities now present themselves
to broaden and deepen cooperation.72 The EU no longer seems to rescind from dealing
with what it used to label the ‘last dictatorship in Europe’, and has now adopted a policy
of pragmatic ‘critical engagement’, which could include more extensive participation
by Belarus in the EU’s reformed EaP.73 Rather than insisting on promoting value-based
reforms, the EU has already adopted a more technocratic and project-oriented approach
towards Minsk, in the understanding that engaging with civil society (rather than the
autocratic elite) is more likely to strengthen liberal democracy in the long run.
The example of Belarus indicates that the EU is aware of the region’s penchant for
‘cumulative integration’, indicating that Brussels is ready to deploy tailor-made and
contextualised policy tools to cater to a specific situation like Belarus.
Armenia
Armenia’s sudden volte-face (in September 2013) from signing an Association
Agreement with the EU, to joining the Russian-led Customs Union (and the subsequent
Eurasian Union) , indicates that Moscow still holds considerable economic and strategic
sway in the Southern Caucasus. Prior to switching its allegiance, Armenia had made
significant progress towards meeting the EU’s high standards (especially in terms of
‘legal approximation’) , and had concluded the DCFTA negotiation stage faster than
69 Smok, V. 2014. ‘Belarus and the EEU: caught between a rock and a hard place’, Opendemocracy.net, 14 May.
70 Bisenov, N. 2015. ‘Put in calls for EEU single currency, despite fierc e Kazakh, Belarusian opposition’, bne.eu,
20 March.
71 Korosteleva, E.A . 2014. ‘The EU has succe ssfully pursued a strategy of democracy promotion by
technocratic me ans in Belarus’, LSE EUROPP, October 6. http://blogs.lse.ac.uk /europpblog/2014/10/06/
the-eu-has-successfully-pursued-a-strategy-of-democracy-promotion-by-technocratic-means-in-
belarus/ (accessed July 2015) .
72 Kaža, J. 2015. ‘EU Has ‘Window of Opportunity ’ to Improve Belarus Relations , Says Lat vian Minis ter’,
The Wall S treet Journal, March 7.
73 Van Elsuwege, P. 2014. ‘EU-Belarus relations: Coping with the reality of the Eurasian Economic Union’,
KIMEP Law-files.
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both Georgia and Ukraine (see below).74 Joining the Eurasian integration progress was
judged unfavourable to Armenia’s economic interests, as the Customs Union was bound
to put burdens on a small, yet open economy. High external tariffs would arguably harm
the country’s buoyant IT sector and compromise its prospective WTO membership.
More particularly, Yerevan was initially concerned that joining the Customs Union could
exacerbate the situation in Nagorno-Karabakh, as establishing customs checks between
Armenia and the break-away region would paralyse its economy and exacerbate an
already bad relationship with Azerbaijan.75
So why did Armenia choose the Eurasian path towards integration with Russia, rather
than the route towards the EU?76 The best, and probably only, answer can be found in
Armenia’s precarious security situation. As Mikael Melkonyan, an MP of the Prosperous
Armenia Par ty, argued, ‘membership in the [Eurasian Union] involves Armenia’s national
security. By opting for the [Eurasian Union] we, first of all, opted for our own security:
Nagorno-Karabakh. Economically, it affords ample opportunities: a 170-million-strong
market, fewer requirements as compared with the European Union and technical
standards of quality, specifically for agricultural and processing sectors.’77 To Armenia,
Russia is both an ally (via militar y cooperation) and a challenge (via Russia’s arms sales
to Azerbaijan). But one things is clear: Armenia is dependent on Moscow for its energy
security (75 percent of its energy requirements), its trade (24.3 percent of its total trade)
and its free access to Russia’s labour market (remittances from Armenian nationals
working in Russia make up 9.1 percent of the country’s GDP).78
To some, this process of ‘proxification’ to Moscow amounts to a de facto surrender by
the country’s leadership, the so-called Kocharyan-Sargsyan ‘diarchy’ that has ruled the
74 Delcour, L. and Wolczuk, K. 2015. ‘Armenia is becoming an impor tant test-case for relations betwe en the EU
and the Eurasian Economic Union’, LSE EUROPP, 13 May. http://blogs.lse.ac.uk /europpblog/2015/05/13/
armenia-is-becoming-an-important-test-case-for-relations-between-the-eu-and-the-eurasian-economic-
union/ (acce ssed July 2015).
75 Grigoryan, M. 2014. ‘Armenia: Karabakh Question Clouds Eurasian Union Accession’, EurasiaNet.org,
10 October.
76 Kostanyan, H. 2015. ‘The Rocky Road to an EU-Armenia Agreement: From U-Turn to Detour ’, CEPS
Commentary, 3 February. http://www.ceps.eu/publications/rocky-road-eu-armenia-agreement-u-turn-
detour (accessed Jul y 2015).
77 Quoted in ‘No material benefit s from Armenia’s EEU membership yet, but legal framework available –
Mikael Melkonyan’, Te rt .am , 5 June 2015.
78 De Micco, P. 2015. ‘When Choosing Means Losing: The Eastern Partners, the EU, and the Eurasian
Economic Union’, Study - EP DG for External Policies.
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From Competition to Compatibility | Clingendael Repor t, October 2015
country since 1998.79, 80, 81 It also begs the question how the EU could encourage Armenia
to adopt a ‘prudent and quiet exit strategy’ from Eurasian integration. As the case of
Belarus shows, Brussels may opt for a traditional public diplomacy approach, stepping
up its involvement with Armenia’s thriving civil society, thereby enhancing domestic trust
in an EU-suppor ted democratic transition. But, more structurally, the EU is engaged
in some political soul-searching, asking ‘what went wrong’ in 2013 when Armenia
rejected the EU’s Association Agreement. The development of a new and more flexible,
differentiated EaP Strategy is under consideration. The idea of a more ‘modest’, so-called
‘AA-minus’ deal (which would take into account Armenia’s commitments to the Customs
Union) was discussed at the EU’s Riga summit in May 2015.82 Such a deal would develop
sectoral mechanisms of enhanced cooperation with Yerevan, possibly encouraging other
Eurasian Union members to expand their economic presence in Armenia. The case of
Armenia indicates that the EU should develop a new EaP strategy, structured as a two-
or-three-tiered mechanism, capable of reaping maximum mutual benefits while avoiding
damaging stalemates that will only wet Russia’s neo-imperial appetite.
Kyrgyzstan
Kyrgyzstan joined the Eurasian Union a few months after its official inauguration
(May 2015). Kyrgyzstan’s GDP comprises a mere 0.3 percent of the Eurasian Union’s
total output.83 This virtually negligible economic clout largely explains why Kyrgyzstan
is unable and unwilling to pursue a (more or less) independent, ‘multi-vector’ foreign
policy, and is inclined to go along with Russia’s Eurasian geopolitical aspirations.84
79 Wilson, A., op . cit., p. 180 .
80 Broer s, L. 2015. ‘Nagorno Karabakh: The benefits of being in t he margins’, European Leadership Network,
18 March. http://www.europeanleadershipnetwork.org/nagorno-karabakh-the-benefits-of-being-in-the-
margins-_2557.html (accessed June 2015).
81 Giragosian, R. 2015. ‘Armenia and the Eurasian Economic Union: The view from Yerevan’, ECFR
Commentary, 8 Januar y. http://www.ecfr.eu/article /commentary_armenia_and_the_eurasian_economic_
union_the_view_from_yerevan387 (accessed Jul y 2015).
82 EUFOA , 2015. Riga Summit strengthens EU-Armenia relations, 23 May. http://www.eufoa.fr/
newsroom/317/93/ Riga-Summit-strengthens-EU-Armenia-relations/?cntnt01limit=4& cntnt01template=
display_home&cntnt01options=3 &cntnt01detailpage= collection-de-nouvelles&cntnt01orderby=item_
date+DESC&cntnt01origid =67 (accessed July 2015) .
83 Rickleton, C. 2015. ‘Kyrgyzstan Signs Final Eurasian Union Treat y’, EurasiaNet.org, 21 May.
84 Satke, R . 2015. ‘Kyrgyzstan and the Eurasian Economic Union: T he view from Bishkek’, ECFR Commentary,
9 May. http: //www.ecfr.eu/article/commentar y_kyrgyzstan_and_the_eurasian_economic _union_the _
view_from_bis3022 (acces sed July 2015).
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Moscow still considers its dominance in Central Asia as the best (and arguably easiest)
way to compensate for its fading geopolitical influence on its western flank.85
It is crucial to highlight that over 10 percent of Kyrgyzstan’s 5.7 million citizens are
migrant workers, making remittances from Russia and Kazakhstan a vital component of
the country’s economy (around 25-30 percent of total GDP). Fervent and vocal support
for the Eurasian Union therefore comes naturally to Kyrgyzstan (at both elite and popular
levels), as it basically assures the free movement of workers among all its members.
Support for Eurasian integration is equally strong in the agricultural sector, even though
integration-related reforms during the first transitional months into the Eurasian Union
caused significant hardship. Russia and Kazakhstan have pledged around US$300
million to help Bishkek during this difficult period, providing Kyrgyzstan with more
resources to limit its ‘economic absorption’ into China’s growing sphere of influence
in Central Asia.86 This should strengthen Bishkek’s official narrative that Eurasian
integration will create jobs and generate economic growth, if not now then at least in
the near future.
Economic research nuances, and slightly clouds, this overly rosy picture. The Custom
Union’s higher tariffs are already affecting the influx of cheap Chinese imports, hurting
the Kyrgyz retail sector. It also negatively impacts on communities in the country’s
south who depend on trade with (non-Union members) Tajikistan and Uzbekistan.
This adds to Kyrgyzstan’s already bleak economic prospects, which include a weak and
vulnerable economy with rampant inflation (at around 10 percent). Moreover, critics
warn that Eurasian Union membership limits an already miniscule room for foreign policy
manoeuvre.87 Little surprise, therefore, that public support for Eurasian integration has
come under pressure, dropping from 74 percent in 2011 to just under 50 percent in
2014 .88
Like Armenia, Kyrgyzstan’s main reason to join the Eurasian Union is a combination of
security reasons and Russian subsidies. Russia accounts for 33 percent of Kyrgyzstan’s
imports and 13 percent of its exports, which, together with the massive influx of
85 Auelbaev, B.A. , et al. 2015. ‘Central Asia 2020- Four Strategic Concepts’, Kisi Report, 10. http://kisi.kz/en/
categories/books/posts/central-asia-2020-four-strategic-concepts-report (accessed July 2015). See also:
Oliphant , C. et al. 2015. ‘C entral A sia at a crossroads’, Saferworld Report.
86 Balci, B. and Kassimova, E. 2 015. ‘How Central Asian Republics Perceive the Emerging Eurasian Union’,
Carnegie Endowment for International Peace, 24 January. http://carnegieendowment.org/2015/01/24/
how-central-asian-republics-perceive-emerging-eurasian-union (accessed July 2015) .
87 Kosolapova, E. 2 015. ‘Kyrgyzstan’s benefits from joining to Eurasian Union questionable’, Trend.az, 12 May.
88 Rehm, S. 2015. ‘As Kyrgyzs tan Joins Russia’s Eurasian Economic Union, Not Everyone’s Happy’, Th e Moscow
Times, 6 May. http://www.themoscowtimes.com /business/article/as-kyrgyzstan-joins-russias-eurasian-
economic-union-not-everyones-happy/520296.html (accessed July 2015).
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From Competition to Compatibility | Clingendael Repor t, October 2015
remittances from Kyrgyz workers, add up to significant Russian political leverage
over Bishkek. What is more, ethnic Russians account for 12 percent of Kyrgyzstan’s
population, and Moscow still operates a military base just outside the capital. Although
not a political plaything, Kyrgyzstan certainly qualifies as a willing ally in Russia’s
geopolitical project in Central Asia.
4.5 Eurasia’s fringes: from Tajikistan and Azerbaijan,
toGeorgiaand Moldova
Tajikistan
Tajikistan has not yet joined the Eurasian Union, but membership may be a matter of
time given the country’s similarities with Kyrgyzstan: that is, a very weak economy,
high dependence on labour mobility within the Union, and political susceptibility (if
not vulnerability) vis-à-vis Moscow.89 Around 50 percent of all Tajik working-age males
live abroad, mostly in Russia, which explains why remittances constitute a whopping
49 percent of the country’s GDP.90, 91 This umbilical cord ties the country to Russia’s
economic ups and downs. Recently, Tajik labour migration to Russia slowed down, as
Moscow decided to place restrictions on working visas for non-Eurasian Union citizens.
Last year, some 270,000 Tajiks were placed on a so-called ‘re-entr y ban list’, a patently
deliberate move by Moscow to encourage Dushanbe to reconsider its aloofness towards
the Union. Russia’s clout also includes the military field, as the 201st Motor Rifle Division
is in charge of patrolling the extremely volatile Tajik-Afghan border. Russia has made it
clear that it ‘wants to see Tajikistan in the [Eurasian Union]’,92 and is spending significant
time and resources to speed up ongoing accession negotiations.93 It is therefore ‘only a
matter of time until Tajikistan bows to the inevitable’.94
89 Balci, B . and Kassimova, E., op. cit.
90 Schot tenfeld, J. 2015. ‘Tajikist an’s Russian Dream’, Foreign Affairs, May 11. https://www.foreignaffairs.com/
articles /tajikist an/2015-05-11/tajikistans-russian-dream (accessed July 2015) .
91 Trilling, D. 2015. ‘Tajikistan: Remittances to Plunge 40% – World Bank’, EurasiaNet.org, May 26.
92 Tass- Russ ian News Ag ency, ‘Rus sia wants t o see Tajikist an in Eurasian Economic Union’, 23 October 2014.
http://tass.ru/en/economy/756064 (accesse d July 2015) .
93 Eurasian Development Bank, 2013. Economi c Impact of Tajikistan’s Accessi on to the Customs Union
and Single Economic Space, April. http://www.eabr.org/e/research/centreCIS/projectsandreportsCIS/
Tajikistan_CU_ SES/ (ac cessed July 2015).
94 Trilling, D., op. cit.
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Azerbaijan
Azerbaijan is the only Eastern Partnership country that has refrained from formally
joining either the EU’s or Russia’s ‘sphere of integration’. Baku has not signed any
agreement with the EU on free trade or cooperation, and has equally kept Russia at
a distance by refusing to join the Customs Union. Azerbaijan’s ‘Grand Strategy’ (as
confirmed by President Ilham Aliyev’s remarks at the 2014 Davos Forum) hinges on
preserving a safe distance from both integration projects, while reaping benefits from
maintaining pragmatic relations with both Unions without compromising the country’s
sovereignty.95
Although Azerbaijan joined the CIS in 1993, it has never been a particularly active
member, sticking to its position of a ‘quiet distance’ from all subsequent post-Soviet
integration efforts. This room for manoeuvre and self-confidence is sustained by its
(oil- and pipeline-based) wealth and economic growth, as well as its vast array of
partnerships with countries outside the post-Soviet sphere.96 For Baku, this strategy
seems to work well, and domestic calls for a move to join the Eurasian Union remain
modest and muted. Azerbaijan relies on oil for over 90 percent of its total exports
and would have little to gain from joining the Customs Union. An argument has been
made that some association with the Eurasian Union would offer Baku a means to
defend the rights of its approximately 600,000 citizens working in Russia (whose
remittances account for 1.3 percent of the country’s GDP). However, this does not seem
to outweigh the anticipated disadvantages, such as higher external tariffs and closer
ties with a neo-imperial Kremlin.97
For now, Azeri citizens enjoy visa-free travel within the Eurasian Union, even without
membership. Its national tariffs and trade barriers can be managed independently from
Moscow’s commands inside the Customs Union, offering Baku more leeway to develop
close ties with third countries, including Turkey and China. This specifically applies to
Azerbaijan’s oil industry, a crown-jewel it safeguards from outside interference. Finally,
and on a more socio-political note, it should not be forgotten that Azeris blame Russia
(and its support for Armenia) for the loss of ‘their’ territories in the Nagorno-Karabakh
region. Baku would face a strong popular backlash should it decide to tighten its official
95 Nurullayev, R. 2014. ‘Azerbaijan at cr oss-roads: European Union or Eurasian Union’, Strategic Outlook,
28 December, http://www.strategicoutlook.org/caucasus/news-azerbaijan-at-crob-roads-european-
union-or-eurasian-union.html (accessed July 2015).
96 Kempe, I., et al. 2013. ‘ The South Caucasus Betwe en the EU and the Eurasian Union’, Caucasus Analytical
Digest, no. 51, 17ss.
97 Walker, S. and Nardelli , A. 2015. ‘Russia’s rouble crisis po ses threat to nine countries relying on
remittances’, The Guardian, January 18.
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ties with an ‘enemy of the nation’ by a possible rapprochement towards the Eurasian
Union, making this an unlikely scenario for the foreseeable future.
Georgia and Moldova
Similar choices have to be made by the last two countries examined in this section:
Georgia and Moldova. Like Ukraine (see Chapter 4.6), both countries find themselves at
the fringes of Russian power, facing the question of whether (and if so, how) free trade
with the EU could be reconciled with a modus vivendi with Moscow that would entail
a fruitful affiliation with the Customs Union/Eurasian Union.98 With the collapse of the
USSR, both countries adopted the well-known ‘multi-vector’ strategy, actively engaging
with Russian as well as EU initiatives. In 1994, both Georgia and Moldova joined the
CIS and subsequently signed Partnership and Cooperation Agreements with the EU.
In the recent past, both countries have been regularly subjected to politically motivated
Russian trade sanctions, stimulating their economic reorientation to EU markets.
In 2005, in a marked swing westward, Moldova adopted integration into the EU as its
new strategic goal.99 This did not, however, prevent it from joining the CIS Free Trade
Area (CISFTA) in 2011, confirming Chisinau’s understanding that the two zones of
integration are not mutually exclusive. Georgia withdrew from the CIS at the outbreak of
the war with Russia and its proxies in 2008, and has never signed up to the CISFTA. Still,
and perhaps somewhat surprisingly, Georgia’s bilateral trade agreement with Moscow
remains in force. This demonstrates Russia’s continued economic relevance in the
region, overruling even ardent bitterness and strategic disputes. In recent years, both
Moldova and Georgia have adopted pro-EU reform programmes, seemingly renouncing
their multi-vector policies for a pivot towards the West. This process climaxed in
June 2014, when both countries signed Association Agreements (anticipating the
establishment of DCFTAs) with the EU, showing their independence in the aftermath
of Russia’s annexation of the Crimea.
Although a strategic surprise to many, that choice was based on an established track
record of approximation towards the EU, illustrated by the European Integration Index
for EaP countries, which recognises both countries as top performers in almost all
relevant areas over the past few years.100 Moldova is the front-runner in terms of visa
98 Della Sala, V. 2015. ‘The EU and the Eurasian Economic Union: between partner ship and threat? ’, in eds.
Dutkiewicz P. and Sakwa, R., op . cit., 168.
99 Eastern Europe S tudies Centre, 2012. Eurasian Union: A Challenge for the European Union and Eastern
Partnership Countries, December http://w ww.eesc.lt /uploads/news/id459/Eurasian %20Union-a% 20
Challenge%20for%20the %20European%20Union% 20and%20Eastern%20Partnership%20Countries.pdf
(accessed July 2 015).
100 EAP, 2014. What is the Eastern Partnership Index?, http://www.eap-index.eu/about (acces sed June 2015) .
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liberalisation (achieved in April 2014) and, despite still being plagued by high-level
corruption, its National Action Plan on the implementation of the EU’s Association
Agreement has been well received. The same applies to Georgia, whose transition to
a stable parliamentary democracy has been widely recognised, as is testified by high
scores on key indicators of ‘deep and sustainable democracy’ (i.e., media freedom,
party financing regulations, engagement with civil society, etc). As a result, Georgia is
considered a success story among the EU’s six Eastern Partnership countries.
The slow but steady drift towards the EU was motivated by the creation of the (Eurasian)
Customs Union in 2010. It was readily foreseeable that, once incorporated into a
Russian-led Eurasian Union (since 2015), the Customs Union would limit both countries’
room for strategic manoeuvre, thereby compromising their independence. Economically,
the ‘choice for Europe’ was straightforward and logical, given that a DCFTA with the EU
unlocks a market of over 500 million prosperous consumers.101 The EU is already the main
trading partner of both countries (Georgia: 26 percent, Moldova: 53 percent), as well
as their number one foreign investor.102 Joining the EU’s DCFTA is expected to generate
significant economic growth for both countries (Georgia: plus 4.3 percent, Moldova:
plus 5.4 percent). The costs of approximating the EU’s trade rules and regulations have
proven to be modest (or at least acceptable), also because the EU assists EaP countries
to offset their transition costs.103 Unfortunately, the political costs of a backlash from
Russia have proven to be more difficult to anticipate and counteract. Moscow’s tactics
to complicate the EU-pivot of Moldova and Georgia are wide ranging and substantial
(both economic and political), and its retaliatory measures are more immediate than the
mid-term benefits of joining the EU project. This inevitably poses challenges for political
elites in both countries who (in order to get elected) must make the benefits of their
‘choice for Europe’ tangible and immediate.104
Georgia’s embrace of a European future is bolstered by domestic support of well above
70 percent, strengthened by a marked pro-Western stance and a very strong strategic
relationship with the United States and NATO. Respective Georgian governments have
reduced their economic and energy dependence on Russia, shifting their focus to
101 EE AS, 2014. Advantages of D CFTA EU-Georgia ver sus Customs Union , January. http://eeas.europa.
eu/delegations/georgia/documents/news /2014/dcfta_advantages_vscustomsunion_2014_01_en.pdf
(accessed June 2015).
102 Tsereteli, M. 2014. ‘G eorgia and M oldova: Staying t he Cours e’, in Putin’s Grand Strategy: The Eurasian Union
and Its Discontents, eds. St arr, F.S. and Cornell, S., 133ss.
103 ‘EU vows to support Geor gia in DCF TA implementation’, Agenda.ge, 11 May 2015.
104 Schäffer, S. 2014. ‘EU-Russian relations have been further s trained by Georgia , Moldova and
Ukraine’s decision t o sign agreements with the EU’, LSE EUROPP, July 3 http://blogs.lse.ac.uk/
europpblog/2014/07/03/eu-russian-relations-have-been-further-strained-by-georgia-moldova-and-
ukraines-decision-to-sign-agreements-with-the-eu/ (accessed July 2015).
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oil-rich Azerbaijan, which now supplies the bulk of Georgia’s energy needs. Russia’s
long-standing agricultural embargo (in force since 2006) has, somewhat paradoxically,
resulted in a healthy diversification of Georgia’s export markets, equally diminishing
Tbilisi’s dependence on Russia.10 5 Nonetheless, Russia continues to wield significant
clout over the Caucasian country. For example, remittances from citizens working in
Russia account for some 4.5 percent of Georgia’s GDP, turning Moscow’s frequent
threats to curtail labour mobility into a sword of Damocles. The Caucasus also remains
an ethnic hotspot, fraught with pro-Russian ethnic minorities open to manipulation
from Moscow. The long-standing Russian support for the “independence” of Georgia’s
breakaway regions of Abkhazia and South Ossetia remains an open wound and
a constant reminder of Moscow’s intentions in this part of the Caucasus.106
Moldova has adopted a more circumspect and cautious pro-Western stance. Its
economy remains closely connected to the post-Soviet space, making a reorientation
away from Russia complicated. This has become especially clear as it has proven
hard to compete in an exacting EU market.107 Russia still accounts for 30 percent of
Moldovan exports, and 16 percent of its imports. Even more importantly, Russia supplies
95 percent of Moldova’s energy needs. To top things off, Moldovan workers in Russia
send home over US$1 billion in remittances every year, amounting to 9.3 percent of
Moldova’s GDP.108 Because Chisinau’s military capabilities are very modest, the spectre
of a ‘Crimea-style’ destabilisation measure enticed by Russia’s notorious ‘little green
men’, has become very real.109 In particular, Moscow’s longstanding threat to officially
recognise the independence of the break-away region of Transnistria (where most
Moldovan industry is based) could further destabilise an already volatile region.
Russia still maintains some 1,500 troops in Transnistria, a situation that has become
unsustainable now that the region is squeezed between its two pro-Western neighbours
(Ukraine and Moldova).
105 Id., p. 7.
106 Antidze, M. 2015. ‘Georgia c ondemns Russia, Sou th Osset ia deal as step toward annexation’, Reuters,
19 Februar y. http://w ww.reuters.com /article/2015/02/19/us-georgia-russia-iduskbn0ln1nh20150219
(accessed June 2015).
107 Despite such obstacles, the reorientation efforts made by the government are starting to yield dividends,
with exports t o the EU grow ing by 22.5 percent in the first four months of 2014, while the CIS share shrank
by 18.8 percent – see Cenusa, D. et al. 2014. ‘Russia’s Punitive Trade Policy Measures towards Ukraine,
Moldova and Georgia’, CEPS Working D ocument , no. 400, September, 7. http://www.ceps.eu/system/files/
WD%20300%20Punitive% 20Trade%20Measures%20by%20Russia_0.pdf (accessed June 2015).
108 De Micco, P., op. cit . p. 24.
109 Alexander, D. 2014. ‘Top NATO C ommander C oncerne d About ‘L ittle Gr een Men’ in Moldova’, Atlantic
Council, 17 September. http://w ww.atlanticcouncil.org/blogs/natosource/top-nato-commander-
concerned-about-little-green-men-in-moldova (accesse d June 2015).
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Russia’s pre-occupation with (Eastern) Ukraine seemed at first to offer a small
window of oppor tunity to pressure the Transnistrian authorities to adopt the EU’s
DCFTA provisions, which are expected to become a tool of economic and societal
modernisation. This could well pave the way for the restoration of Moldova’s territorial
integrity.11 0 Although Moldova’s course towards the EU seems sturdy, its popular basis
remains fragile: a recent survey indicates that some 44 percent of the population is
pro-EU, whereas 40 percent favour Eurasian integration. The pervasiveness of Russian
(state-controlled) media in Moldova is certainly (at least partly) responsible for this
societal division.111 A more concerted and effective EU-led public diplomacy campaign to
‘win hearts and minds’ therefore seems long overdue.112 Unfortunately, recent corruption
scandals have tarnished the image of the pro-EU government and given Russia a
renewed opportunity to influence Chisinau’s political course.
4.6 Ukraine: veritable borderland
Ukraine has tried to stay aloof from most post-Soviet integrationist initiatives, with mixed
results. The countr y’s strategic orientation (East or West?) has been uncertain since
its independence, culminating in two revolutions, in 2004-05 the so-called ‘Orange
revolution’, and, more recently, in 2013-14 the so-called ‘Euromaidan revolution’. Ukraine
joined the CIS at its foundation in 1991, but never ratified its charter (which de facto
invalidated all CIS rules and regulations).113 Under President Kuchma (1994-2005) ,
Ukraine’s foreign policy course maintained a careful but delicate equilibrium between
Russia and the West (including the EU and NATO), without committing itself to either
side. Joining European integration was enshrined in Ukrainian legislation as an official
foreign policy goal at the same time as ties with Russia were intensified.114 Ukraine also
became an observer in the EurAsEC, which did not change the country’s foot-dragging
on all Russian post-Soviet integration proposals.
During the reign of pro-Russian President Viktor Yanukovych (2010-14), Ukraine’s
commitment to the EU was substantiated by its ambition to sign an Association
Agreement in the framework of the EU’s Eastern Partnership. Ukraine had already
110 Calus, K. 2015. ‘Transnistr ia’s Economy Going from Bad to Worse’, New Eastern Europe, 23 January.
http://w ww.neweasterneurope.eu/articles-and-commentary/1462-transnistria-s-economy-going-from-
bad-to-worse (accessed June 2015) .
111 E A P, op. cit ., p. 33.
112 Paul, A. 2014. ‘Moldova - Heading into a hot autumn’, EPC Policy Brief, 6 Oct ober. http://www.epc.eu/
pub_details.php?cat_id= 3& pub_id =4880 (accessed June 2015).
113 Formally speaking, Ukr aine is not therefore a member but rather ‘a founding and participating s tate’.
114 Hist ory of Ukraine – EU relations, M FA of Ukraine ( in Ukrainian), ac cessible via: http://mfa.gov.ua/ua/
about-ukraine/european-integration/ua-eu-relations.
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signed the so-called ‘Kharkov Agreements’ with Russia (in 2010), where Kyiv agreed
to extend Russia’s lease of the Sevastopol naval base on the Crimea by 25 years
(until 2042) in exchange for a substantial discount on Russian natural gas. The Yanu-
kovych government faced considerable pressure from Moscow to join the Eurasian
Union as a full member. Ukraine was compelled to make several concessions, and had
already seen itself forced to join the CIS Free Trade Area in 2011 as well as to declare its
commitment to the Eurasian Union, albeit as an observer.115 These hesitant baby-steps
towards Eurasian integration were hardly sufficient for Russia, which increased pressure
on Ukraine to make the final and irreversible choice of Russia and Eurasia. This seemed,
at least at the time, an either-or choice between two competing integration projects.
The EU also adopted the narrative that the Eurasian-centred Customs Union was
incompatible with the DCFTA in the framework of its Eastern Partnership. As European
Commissioner Stefan Füle put it: ‘You cannot at the same time lower your customs tariffs
as per the DCF TA and increase them as a result of the Customs Union membership.’116
However, the possibility of combining simultaneous membership of different free trade
areas remains, as is clear from Ukraine’s continuing membership of the CISFTA while
having a DCFTA with the EU.
Numerous studies have examined whether Ukraine (and other post-Soviet states)
really have to choose, or could instead opt for the best of both worlds. A 2012 study
for the Carnegie Foundation suggested that hooking up to the EU would be best
for Ukraine: initial costs of the obligator y reforms required by the DCFTA (most
notably in the metallurgical sector), would be offset by Ukraine’s enhanced access
to the EU agricultural and industrial market.117 In contrast, Russian studies pointed
at the significant advantages of joining the Eurasian Union.118 Even though President
Yanukovych was closely connected to the pro-Russian industrial lobby in Ukraine,
he remained hesitant to choose the Eurasian option, which seemed to prove that the
economic and political benefits of ‘joining Russia’ were modest and risky. Only blatant
intimidation by Russia (which promised loans and gas discounts if Ukraine were to
115 Ukrainian status in the EEU is currently unclear. Despite some indications in 2013 that it was going to get
obser ver stat us (see: RFE/RL, 2013, ‘Kyrgyzst an To Join Russian-Led Cus toms Union, Ukraine To Observe’,
29 May. http://w ww.rferl.org/content/kyrgyzstan-ukraine-russia-customs-union/25001114.html), it has
never really participated in the organisation.
116 Füle, S. 2013. ‘Statement on t he pressure exercised by Russia on countries of the Eastern Partner ship’,
European Parliament Plenary, in Strasbourg, 11 September, 2.
117 Shumylo-Tapiola, O. 2012. ‘Ukraine at the Crossr oads: Between the EU DCFTA & Customs Union’, Carnegi e
Endowment- Russie.Nei. Report, no. 11, April; Movc han, V. and Giucc i, R. 2011. ‘Quantitative Assessment
of Ukraine’s Regional Integration Options: DCF TA with European Union vs . Customs Union with Russia,
Belarus and Kazakhstan’, German Advisory Group, Institute for Economic Research and Policy Consulting-
Policy Paper, November.
118 Ivanter, V. et al. 2014. ‘Economic Consequences of the Creation of the Eurasian Economic Space and
Ukraine’s Joining It’ (in Russian), Eurasian Economic Integration, February, 1(14), 4-26.
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join the Customs Union and threatened an all-out trade war if it refused to do so),
forced President Yanukovych to rescind from signing an already arranged Association
Agreement with the EU in November 2013.
This turn of events set off an unprecedented crisis in Europe, giving rise to unresolved
strategic challenges at the heart of the continent. It has also firmly pushed Ukraine on
the path towards EU integration. In March 2014, the new Kyiv government relinquished
Ukraine’s presidency of the CIS and announced its plan to leave the organisation
altogether. In December 2014, parliamentar y debates remained indecisive on this matter,
and concluded that Ukraine aims at ‘bringing co-operation in the CIS framework to a
minimum’.11 9 This ambivalent position towards the CIS illustrates Ukraine’s unwillingness
to alienate neutral post-Soviet states and moderate Russian allies (such as Belarus and
Kazakhstan). Ukraine’s strategy to obtain support from these countries is paying off: in
September 2014, CIS officials rejected Russia’s calls to expel Ukraine from the CISFTA.120
Therefore, despite constant trade wars and trade skirmishes, Ukraine remains in the
CISF TA.
Ukraine’s trade with Russia has all but collapsed since the beginning of the conflict,
due to deteriorating bilateral relations and significant economic problems in both
countries.121, 122 Russia is bent on sanctioning Ukraine through the revocation of its
CISFTA and by imposing a vast array of non-tariff barriers on Ukrainian goods. Although
a (albeit ad hoc) modus vivendi on Russian energy supplies has been found by the
new government in Kyiv in the context of trilateral ( EU, Ukraine, Russia) discussions,
Moscow still has significant economic leverage over Ukraine. For example, Russia
is the main market for Ukrainian technological products, particularly for transport
equipment, which represents 34 percent of Ukraine’s exports to Russia (in 2013).123
Even the most accessible EU market will not be able to compensate Ukraine for losing
the Russian market in these strategic sectors. Even now, Ukraine’s deep and continued
economic crisis is largely due to the collapse of bilateral trade with Russia and the
lack of Ukrainian competitiveness on the Western market. Russia also keeps pressure
119 ‘Ukraine and the C IS’, Den (in Ukrainian) , 16 March 2015; Ukrainian Mission to the CIS, Participation
of Ukrai ne in the CI S (in Ukrainian), 2012. http://cis.mfa.gov.ua/ua/ukraine-cis/cooperation
(accessed May 2015).
120 ‘Russia war ns to exclude Ukraine fr om CIS free trade zone’, Xinhua, 15 September 2014.
http://news.xinhuanet .com/english/world/2014-09/15/c_133644835.htm (accessed May 2015); ‘CIS says
that there are no grounds to exclude Ukraine from the FTA’, Biznes-Vesti (in Russian), 20 September 2014.
121 ‘ Trade between Russia and Ukraine has decreased three times over the year’, RBK (in Russian) ,
27 May 2015.
122 ‘Ukrainian exports decreased’, Radio Freedom (in Ukrainian), 17 April 2015. http://ww w.radiosvoboda.org/
content/article/26962677.html (accessed May 2015).
123 De Micco, P. op. cit ., p. 28.
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on Kyiv by toughening its legislation regarding (Ukrainian) immigrant workers, which
jeopardises the significant stream of remittances into Ukraine.124 Russia also puts
pressure on Ukraine’s many oligarchs who have massive vested interests in Russia’s
energy companies. Since 2014, Moscow scrutinises the Russian branches of Ukrainian
companies depending on the political profiles of their owners.125 On the flip side, Russian
enterprises in Ukraine get a similar treatment by the Kyiv authorities.126 Further risks are
connected with the unresolved status of the separatist territories in Eastern Ukraine and
the possibility of their greater economic autonomy. Furthermore, the unresolved issue of
Crimea’s future will remain an open wound for decades to come.
Against this background, it is little surprise that Ukraine’s future full implementation of
an EU DCFTA has been a source of acrimonious disputes. Russia has voiced numerous
concerns regarding the pending DCFTA, ranging from fears of falling expor t to Ukraine
to the risk of the dumping of Ukrainian goods (pushed out by higher-quality European
products) into the Russian market.127 Russia has temporarily succeeded in making
Kyiv and Brussels delay the implementation of the (economic part of the) Association
Agreement between Ukraine and the EU until January 2016. After this concession
on the part of Ukraine and the EU, Russia upped the ante and demanded that the
Association Agreement be completely rewritten, taking Russian interests more fully into
consideration. After this was refused, Russia seems to have accepted as a fact that the
Association Agreement will enter into force as signed and ratified by EU member states.
Although fur ther postponement of this Agreement is unlikely, technical arrangements
to satisfy some Russian demands are expected. It seems clear that by invading the
Crimea and destabilising Eastern Ukraine, Russia has won a Pyrrhus victory and lost
any chance it may have had to restore a solid, pro-Russian Eurasian ‘pole’.128 However,
some in Moscow may still well harbour the idea that by putting pressure on Kyiv to
accept a broad autonomy of separatist-controlled areas of Donetsk and Lugansk a
broader settlement might be agreed, which will provide Moscow with the tools to further
influence Ukraine’s foreign policy orientation and somehow force this re-linking upon
a reluctant Kyiv.
124 In 2014, Ukrainian r emittances from Russia accounted for 36 percent of the total flow – i.e., 1.76 percent
of Kyiv’s GDP – see National Bank of Ukraine, Remittances in Ukraine, 2015. http ://www.bank.gov.ua/
doccatalog/document?id= 80651 (accessed August 2015).
125 For example, the confectionar y factor y of Petro Poroshenko in Lipetsk was the subject of a number of
controversies during 2014.
126 Uk rainian risks in case of dismantling economic r elations with Russia are laid out in detail in the study
‘Тупик бор ьбы интегр аций в Европе’ (Deadlock of integration struggle in Europe) prepared by the Eurasian
Development Bank in 2014. It is available ( in Russian) here.
127 The detailed list of Russian claims and their critical analysis can be found in the following study by IMEMO
(in Russian): http://www.imemo.ru/files/File/ru/publ/2014/2014_026.pdf.
128 Re sults of the latest Ukrainian opinion polling on this matter can be consulted here (in Russian).
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From Competition to Compatibility | Clingendael Repor t, October 2015
For the time being, Russia’s bilateral trade relationship with Ukraine and Ukraine’s
continuing participation in the CISFTA seem to be more important points of departure
for (trilateral) discussions on broader trade relations than Ukraine’s eventual relationship
with the Eurasian Union.
Figure 1 ‘Eurasian’ countries’ dependence on Russia
14,7
1,8 1,3 4,3 0,2
33,4
10,5
42,6
0,06 4,5 5,6
0
50
100
Armenia
Azerbaijan
Belarus
Georgia
Kazakhstan
Kyrgyzstan
Moldavia
Tajikistan
Turkmenistan
Ukraine
Uzbekistan
150
200
250
GDP 2014 (bn US$)
Remiances from russia (bn US$)
% Total remiances/GDP
Sources: World Bank; Bank of Russia
4.7 Eurasian Union and Turkey
As Turkey has been offered a closer relationship with the Eurasian Union and is courted
by Russia to develop closer energy and trade links on a bilateral basis, competition
for influence in Central Asia and the Caucasus looks more important at the moment
than any closer relationship between Moscow and Ankara. Turkey seems to look at the
Eurasian Union primarily in terms of increased trade opportunities, energy relations
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From Competition to Compatibility | Clingendael Repor t, October 2015
with Russia being pursued on a purely bilateral basis. Apar t from its already very
strong economic relations with the EU, Ankara also cherishes a close relationship with
Azerbaijan and is eyeing further opportunities in the Caspian Sea region. Against this
background, prospects for a closer and/or even more formal relationship between
Turkey and the Eurasian Union do not seem very bright. Like many other third parties
(including such different actors as Egypt and Vietnam), Turkey mainly seems to pay lip
service to the ideals of this new integration project, hedging with other partners (like
the EU) against greater Russian influence or even dominance in the neighbourhood. At
the same time, Turkey is profiting from not taking part in EU sanctions against Russia by
partly taking over market gaps left by European partners because of the Russian anti-EU
sanctions.
4.8 EU-EEU relations: a more effective bilateral approach or
amore formal multilateral relationship?
From its early origins Russian foreign policy has been dominated by strong bilateral
relationships, especially with the greater powers of the world. In this light, relations with
the EU have always been complicated for Moscow, due to a lack of understanding of the
supra-national elements in the EU’s character and its own strong preference for dealing
with the bigger member states on a bilateral basis. In this respect, Berlin, Paris and
Rome have always been more important to Moscow than Brussels.
Russian activity within post-Soviet multilateral organisations, like CIS but also the newly
founded Eurasian Union, has always been combined with strong bilateral links with the
capitals of partner countries concerned. In that way, Moscow could more easily put
pressure on these newly independent countries and cajole or even force them to act
according to its wishes. As indicated above, energy relations (not a part of the Eurasian
Union), labour relations and security relations could all be used to influence ‘partner
countries’, either through a Russian-dominated multilateral framework or on a bilateral
basis.129
For the EU, this could have a number of implications, both for its relations with Russia
and for dealing with other post-Soviet states in the context of a new Eastern Partnership,
but also when dealing with the Eurasian Union:
– the present neo-isolationist course in Russia can only be countered effectively if
there is sufficient political will in the Kremlin to change course and return to a policy
of working towards greater convergence of two – at present conflicting – economic
and political systems;
129 Wilson Rowe , E. and Torjesen, S. (eds), 200 9. The Multilateral Dimension in Russian Foreign Policy, Abingdon,
Oxon and New York, Routledge.
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– such a convergence, as was attempted previously on the basis of developing a
Common Economic Space and a Partnership for Modernisation, would have a
positive impact on the EU’s relations with Eastern Partnership countries as well:
it would reduce the likelihood of conflicting interests between the EU and Russia in
the ‘shared neighbourhood’, as developments in Russia and the EaP countries would,
in principle, move in the same direction, that is, approximation and convergence with
the EU acquis;
– as long as Moscow does not change course, there are only limited possibilities for
the EU to work constructively with Russia on more technical and non-political levels
towards the realisation of common goals in the ‘neighbourhood’, be it in a trilateral
framework (like EU-Ukraine, Russia) or with (Russia-dominated) multilateral
organisations like the Eurasian Union130;
– the EU could tr y to match the strong Russian preference for bilateralism by
developing its own strong and differentiated relationship with the countries of the
Eastern Partnership on a bilateral basis, offering them alternative options when
Russia does not respect their sovereign (pro-European) choice;
– the EU could do the same by developing closer cooperation with Central Asian
states, especially Kazakhstan, to encourage their own multi-vector approach and
work with them in the context of multilateral frameworks (ASEM (Asia-Europe
Meeting) , and maybe in future even the SCO: see also discussion in Chapter 5 on
EU-China), which could serve to overcome at least some of the new economic and
financial dividing lines formed as a consequence of the Russian policy of competing
regionalisms;
– when dealing with Russian-dominated organisations, like the EEU, the EU could
well opt for working more closely with and through the other member states, asking
for their opinions on and input in broader discussions with such organisations.
As Russia has in the past succeeded in having some meetings with the EU in
‘EU-plus’ formats, the EU could put forward the idea that more formal and more
political discussions with, for example, the Eurasian Union, should be held not only
with the Eurasian Commission, but also with all EEU member states attending.
130 Evgeny Vinokurov offers some interesting suggestions for a possible agenda for w hat he calls a ‘ Mega Deal
betwe en the European Union and the Eurasian Economic Union’; published in full in Russia in Global Affairs,
November/December 2014.
53
5 China and the EU facing
Eurasian integration:
strategies and interests
5.1 Introduction
Since the beginning of the millennium, China’s foreign policy has shifted away from
Deng Xiaoping’s ‘low-lying’ doctrine towards a proactive and ‘responsible’ global
engagement. Today, China is engrossed in a vast array of new and often ambitious
initiatives and projects, of which the development of a New Silk Road is the best
known. China’s new-found self-confidence and activism has resulted in a strategic
focus on Central Asia, making the process of ‘Eurasian’ integration a central plank of
Beijing’s foreign policy. The contrast with the EU’s approach to this region could hardly
be starker; while Brussels may be geographically far removed from Central Asia, the
‘psychological’ distance is even greater. Where China considers Central Asia and the
process of Eurasian integration as a core element of its ambition to tie China to Europe
(and the West in general), the EU (and all its member states) seemed for a long time to
consider this region a peripheral concern, an area of which they tend to know little and
care (if that is possible) even less.
This chapter examines the approaches of China and the EU towards Central Asia and
asks what role the latter region plays in the shifting balance of global power and in
the context of competing regionalisms: Greater European, Eurasian and Greater Asian.
Although the upsurge of Eurasian integration (and the Eurasian Union in particular)
plays a role only in the background, the vast policy gap between China and the EU is
worth sketching out, if only to indicate why Brussels needs to pay attention to a region
that is bound to gain in strategic importance. It could also indicate the need for broader
dialogue with China in those areas where EU and Chinese interests do not coincide
with Russia’s geopolitical and geo-economic aspirations, including in the EU’s Eastern
Neighbourhood.
5.2 Sino-Russian relations: shifting balance in the axis of
convenience
The axiom ‘geography is destiny’ certainly holds true for Central Asia, a region wedged
between two competing great powers: Russia and China. For almost 40 years, Moscow
and Beijing have competed in an often hostile relationship. However, since the late
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1980s, a more cooperative Sino-Russian liaison has developed, culminating in a
multidimensional ‘strategic partnership’ based on a shared commitment to establishing a
‘global multipolar order’. A common interest in ‘soft balancing’ against a (still) dominant
West explains this ‘axis of convenience’,131 as well as the need (especially for China) to
limit external pressures in order to focus on both countries’ internal challenges. Sino-
Russian relations do not add up to an emerging ‘anti-Western, antidemocratic alliance’,
as predicted by some analysts.132 Instead, cooperation between these two great powers
is pragmatic, and therefore bound to change if their strategic interests collide. The
growing asymmetry in this relationship is likely to make this ‘axis’ less ‘convenient’,
particularly for the poorer and most discontented partner, Russia. The ensuing
growing tension between Russia and China would thus put significant strain on their
‘partnership’, which is also coming to the fore in their approach towards Central Asia
and their commitment to the process of Eurasian integration. In this context, they are
often referred to as newly found ‘frenemies’.
Russia’s dwindling political and economic weight stands in stark contrast to China’s
growing self-confidence and global reputation.133 Russia has faced Westerns sanctions
since the Crimean invasion and the conflict in Eastern Ukraine, putting a dramatic end
to the illusion that Russia could become part of the developed and globalised ‘West’. As
referred to in Chapter 4, the fact that its economy and society have not been modernised
has led Russia to retreat into its Eurasian heartland, keen to re-establish there its
identity and power base and develop its own pole between the West and China in the
new multipolar world it envisages. Lacking the (economic and military) resources to
control its periphery,134 Moscow is making its own ‘pivot’ towards Asia, developing its
ties with China as a veritable economic and financial lifeline to prevent the collapse of
the Putin regime.135 Putin’s (personal) ‘special relationship’ with President Xi Jinping
has helped to improve ties. Moscow also uses its relations with China to strengthen its
case that it is hardly isolated in global affairs, despite being shunned by the West. At the
height of the Ukraine crisis (in 2014), a US$400 billion energy deal was signed between
131 Lo, B . 2008. A xis of con venienc e, Washington, DC, Brookings Institutions Pres s.
132 Schoen, D.E. and Kaylan, M. 2015. ‘9 Ways China And Russia Are Par tnering To Undermine The US’,
Business Insider UK, 21 January. http: //uk.businessinsider.com/china-and-russia-are-partnering-on-an-
unprecedented-scale-2015-1?r=US (accessed May 2015).
133 Umland, A. 2015. ‘How Sustainable Is a Sino-Russian Entente ?’, Silk Road Reporters, 18 May. http://www.
silkroadreporters.com /2015/05/18/how-sustainable-is-a-sino-russian-entente / (accessed May 2015).
134 Trenin, D. 2015. ‘Japan’s Eurasian Challenge’, JapanUpClose, May 12.
135 Gabuev, A. 2015. ‘A ‘Sof t Alliance’? Russia-China Relations After the Ukraine Crisis’, ECFR P olicy Bri ef,
10 Februar y. http://w ww.ecfr.eu/page/-/ECFR126_-_A_Soft_Alliance_Russia-China_Relations_After_the_
Ukraine_Crisis.pdf (accessed May 2015).
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From Competition to Compatibility | Clingendael Repor t, October 2015
China and Gazprom, as part of a broader mutual commitment to double bilateral trade
by 2020 (to US$200 billion p/a).136
Russia seems to have accepted the ‘reversal of fortunes’ between both countries and
is now keen to tap into China’s massive financial resources.137 China has much to offer,
ranging from the US$40 billion Silk Road Fund to the Asian Infrastructure Investment
Bank (AIIB) and the BRICS New Development Bank (NDB). Over the past few years,
Russia has had to accept its de facto role as China’s ‘junior partner’, which has major
implications for both countries’ Eurasian policies.138 However, China’s recent economic
and financial problems, leading to a devaluation of the renminbi and a veritable
downturn of the Chinese stock exchange, have cast long shadows over the prospects of
Russia’s new financial lifeline. How far this might also affect China’s broader New Silk
Road plans remains to be seen.
5.3 China and the Eurasian Union: cooperation before
competition
From a Chinese perspective, the strategic weight of Central Asia has risen steadily.
As China looks for resources and markets in its proximity, Central Asia is a logical area
of interest, particularly as it also constitutes a major transit route in China’s New Silk
Road initiative.13 9 China seeks to expand its global outreach while preserving domestic
stability, and the proximity of resource-rich yet far-from-stable countries to its restive
westernmost province of Xinjiang certainly adds to such relevance. China therefore no
longer blindly acknowledges Russia’s claim to geopolitical hegemony over the region,
based on its nostalgic notion that these countries are part of the post-Soviet space.
China has boosted its bilateral engagement with all Central Asian countries, and
overall trade has increased from US$ 460 million in the early 1990s to US$46 billion in
2012. These ballooning ties involve lucrative energy deals (mainly infrastructure for oil
and gas transit with Kazakhstan and Turkmenistan), which have caused unease and
growing concern in Moscow. Although under strain, the Sino-Russian relationship is
unlikely to escalate from tension to conflict over Central Asia. Two main reasons present
themselves.
136 Yu, B. 2015. ‘The Shanghai Cooperation Organisation, China and Eurasian integration’, in eds. Dutkiewicz, P.
and Sakwa, R., op . cit.
137 Trenin, D. 2012. ‘True Partners? How Russia and China see e ach other ’, Centre for European Reform,
13 Februar y. http://w ww.cer.org.uk/publications/archive/report/2012/true-partners-how-russia-and-
china-see-each-other (accessed May 2015).
138 Shi, Z. and Yang, C. 2015. ‘China’s Diplomatic Effor ts to Promote Ener gy and Resources Cooperation
Along the ‘One Belt and One Road’’, CIIS Reports, 27. http://www.ciis.org.cn/english/2015-05/22/
content_7927814.htm (accessed May 2015).
139 Pantucci, R . 2015. ‘Central Asia: the view fr om China’, ISS Alert, no. 3, 23 Januar y. http://www.iss.europa.
eu/publications/detail/article /central-asia-the-view-from-china/ (accessed May 2015).
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First, Sino-Russian relations have become embedded in several institutions, ranging
from the BRICS to the Shanghai Cooperation Organization (SCO). The SCO is of
particular importance here, as (on top of China and Russia) all Central Asian countries
(apart from Turkmenistan) are members. Set up in 2001, the SCO is a truly Eurasian
organisation, aimed at economic, political and military cooperation. Together with the
BRICS, as well as the China-driven AIIB (Asian Infrastructure Investment Bank) and the
NDB (New Development Bank), Russia has ample opportunities to benefit from China’s
financial resources within this growing web of new institutions.
Map 1 China’s New Silk Road initiative
Source : The Wall Street Journal, 9 November 2014
Second, the New Silk Road project offers a unique opportunity to tie Russia and China
together through Central Asia. This new ‘economic belt’ plan was first announced by
President Xi during his 2013 visit to Astana (Kazakhstan) and has subsequently been
branded by some as a new ‘Marshall Plan’ for Central Asia and a central plank of
China’s elaborate strategy to embed its massive economic and financial power within a
multilateral and institutionalised setting.140 For China, the New Silk Road project brings
a wide range of immediate benefits, most notably the ‘lock in’ effect of a resource-
140 Tiezzi, S. 2014. ‘The New Silk Road: China’s Marshall Plan? ’, T he Diplomat, 6 November. http://thediplomat .
com/2014/11/the-new-silk-road-chinas-marshall-plan/ (accessed May 2015) .
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rich region through massive infrastructure projects. The positive spill-over effects for
China’s border regions are also advantageous.141 Russia’s challenge is to strike a balance
between benefiting from China’s economic power while keeping at least a semblance of
influence over Central Asia through a more-or-less institutionalised process of Eurasian
integration.
The Eurasian Union should be examined against this background, bearing in mind
(but stopping short of embracing) the arguments put forward by those considering the
Eurasian Union as a Kremlin-led geopolitical answer to China’s alleged hegemonic threat
in the region. While the Eurasian Union may not be a fully-fledged competitor to the
SCO, it cer tainly offers an alternative framework for regional cooperation that excludes
China. The Eurasian Union’s Common External Tariff, ostensibly aimed at boosting intra-
Eurasian trade, can be seen as potentially ver y detrimental to Chinese businesses in the
region. Although these trade-diversion effects exist, they have hardly changed Beijing’s
rather unfazed attitude vis-à-vis the Eurasian Union.142 This laissez faire approach is
testimony to China’s self-confidence in the region, based on the understanding that
even a beefed up Eurasian Union (which remains an unlikely prospect) will not challenge
China’s already consolidated position as the most important trade partner to all Central
Asian countries (apart from Uzbekistan). Studies indicate that the (potential) negative
trade impact of the Eurasian Union’s external tariffs is more relevant to Central Asia
than to China. For example, since Kazakhstan joined the Eurasian Customs Union (now
part of the Eurasian Union), its economy has become more inward looking: overall trade
with non-Customs Union members decreased, harming Kazakhstan’s opportunities
to climb on the much-discussed ‘global value chain’ through comprehensive ties with
more advanced economies. Interestingly, Central Asia’s trade with China did not seem
to suffer; in fact, exports have increased steadily.143 Furthermore, as energy matters are
excluded for the time being from the Eurasian Union integration process, China does not
seem to be overly concerned with the EEU. After all, energy is one of the most important
elements in China’s relations with Central Asia, and Turkmenistan (one of China’s other
providers of gas outside Russia) delivers a growing amount of gas directly and will most
probably stay out of the Eurasian Union anyway, at least for the foreseeable future.
141 Brugier, C. 2014. ‘China’s way: The new Silk Road’, ISS Policy Brief, no. 14, 16 May. http://www.iss.europa.
eu/publications/detail/article /chinas-way-the-new-silk-road/ (accessed May 2015).
142 ‘ Why China is unfazed by Rus sia’s creation of a Eurasian Union’, World Review, 17 July 2014.
http://w ww.worldreview.info/content/why-china-unfazed-russia-s-creation-eurasian-union
(accessed May 2015).
143 Heal, A. and Mladenovic , T. 2014. ‘Kazakhstan’s membership of the Eurasian Customs Union: Implications
for trade and WTO accession’, ARTNeT Policy Br ief, no. 39, June. http://artnet.unescap.org /publications.
html#first (accessed May 2015) .
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This largely explains why Russia’s ambitions in Central Asia seem non-threatening to
China, mainly as they remain non-starters. Chinese analysts label Russia’s approach
an expression of an ‘obvious backyard mentality’,144 characterised by lofty ambitions
aimed at boosting Moscow’s prestige as a great power, but devoid of real economic
capabilities. Russia’s aim to maintain its ‘sphere of interest’ in Central Asia is considered
old-fashioned, and a reflection of Putin’s one-dimensional, ‘realist’ worldview aimed
at building a polarised and multipolar global order.14 5 Instead, China has moved on,
embracing the New Silk Road as a non-exclusive initiative built on 21st century concepts
like complex interdependence. As one Chinese observer argued, China’s most prominent
Eurasian project is a ‘synthetic cross-regional cooperation initiative’, and a ‘multivariate
and open process’ with win-win outcomes.146 The contrast (and, only superficially,
paradoxical incompatibility) with Russia’s (Eurasian Union) approach could hardly be
starker.
In order to avoid suspicions and a possible backlash from Russia, China performs
a delicate balancing act, strengthening economic ties in Central Asia while not
marginalising Moscow. On the eve of Russia’s giant May 2015 Victory Day parade,
Presidents Xi and Putin signed no less than 32 bilateral agreements, including the
construction of the Moscow-Kazan high-speed rail line. Russia will also receive access
to resources from the Silk Road Construction Fund (US$40 billion), mainly to develop
its agricultural sector. Both countries also agreed on the creation of an experimental
agricultural free trade zone, as well as a ‘roadmap’ for Sino-Russian cooperation in
Central Asia comprising both Eurasian Union and New Silk Road projects.147 Most
importantly, a joint declaration was issued on the coming merger of the Eurasian
Union and the New Silk Road initiative, with the SCO as the primary institutional
centre working towards the development of a Eurasian Union-China free trade area.148
This last element is a clear concession from Russia, which until recently saw the
SCO as a security organisation and was bent on excluding active cooperation in the
economic sphere.
144 Shi, Z. and Yang, C., op. cit.
145 Kaczmarsk i, M. 2015. ‘China and Russia: Two Approaches to Integration’, The Diplomat, 30 Mar ch.
http://thediplomat.com/2015/03/china-and-russia-two-approaches-to-integration/ (accessed May 2015).
146 Yang, C. 2015. ‘The Eurasian moment in global politics : a comparative analy sis of great power str ategies for
regional integration’, in eds. Du tkiewicz, P. and Sakwa , R., op.cit .
147 Doulkina, I. 2015. ‘Russie – Chine : le bond de sept lieues’, Le Courrier d e Russie , 25 May.
http://w ww.lecourrierderussie.com/2015/05/russie-chine-bond-sept-lieues/ (accessed May 2015).
148 Gabuev, A. 2015. ‘Russia-China Talks: Silk Road Leads To Eurasia’, Carnegie Moscow Centre, 15 May.
http://carnegie.ru /2015/05/15/russia-china-talks-silk-road-leads-to-eurasia/i8vo (accessed May 2015).
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These proposals (admittedly still only on paper) confirm China and Russia’s shared
strategic interests in Central Asia and their commitment to avoiding animosity and
conflicts. For China, the stakes are high, as stability in the region is essential in order to
realise the much-touted transit route to Europe. The EEU’s Customs Union reduces the
number of ‘trade borders’ between China and the EU to just two. It is, however, in doubt
whether Russia will be satisfied with keeping these emerging structures of Eurasian
cooperation ‘geopolitically neutral’, as China seems to desire. Were the EU to change
its tack and aim for closer ties with China and this emerging, new Eurasian framework,
Russia may well baulk and attempt to drag China into a more anti-Western faction. In
our view, China would probably resist such efforts, due to its broader strategic interests
in cooperating economically and financially with the West. In a more positive scenario,
the EU’s engagement could encourage a new, more cooperative Russian strategy
towards its Central Asian neighbourhood and, ipso facto, avoid a confrontation between
trade blocs. This could work even better, as such cooperation would not demand
fundamental political and economic reforms from participating countries (as would be
the case with a DCFTA with EaP countries) and would play to Central Asian sensibilities
in their striving for multi-vector approaches in international orientation. For the EU, this
could include cooperating more closely with China on the New Silk Road initiative and
working with the SCO, insofar as that organisation acquires a greater role in stimulating
economic and financial cooperation between its (Asian) member states.
5.4 The EU, China and Central Asia: limited involvement vs
vastambitions
Until the early 1990s, most European countries regarded Central Asia as an ‘enigma’.149
The first European Union delegation in the region was opened in 1994 in Kazakhstan,
followed by the launch of a range of EU technical assistance programmes (like TACIS)
resulting in numerous Partnership and Cooperation Agreements (PCAs) with all
countries in the region, from 1996 onward. Still, the EU’s engagement with Central
Asia remains modest, mainly due to a general lack of interest but also due to a lack of
understanding of the region’s geostrategic importance. Several factors have spurred
a modest strategic rethink within the EU regarding Central Asia’s relevance.
The region’s oil and gas reserves have made the ‘safe export of Caspian energy a
policy priority for the EU’. In the aftermath of the 9/11 attacks, fears of a dangerous
spillover from Afghanistan put Central Asia firmly on Europe’s security radar. After
the EU’s eastward enlargements (of 2004-07) , and the ensuing development of the
EU’s neighbourhood strategy (ENP), Central Asia gained the somewhat ambiguous
149 Fenton, F. 2015. ‘St ate of Play : The EU, Central Asia and the ENP ’, in: The Neighbours of the Europe an
Union’s Neighbours, eds. Gstöhl, S. and Lannon, E., A shgate, London.
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geopolitical status of ‘neighbour of the neighbours’, acquiring some prominence on
the EU’s foreign policy agenda. In 2005, the first EU Special Representative for Central
Asia was appointed, resulting in an EU Central Asian Strategy two years later.150 In that
Strategy, the EU (predictably) aimed to promote regional stability and prosperity via the
‘development and consolidation of stable, just and open societies’. Frequent references
to human rights, the rule of law, and democracy disguised the lack of broader strategic
thinking within the EU vis-à-vis Central Asia, especially when taking into account the
limited resources dedicated to EU policies towards this region.
Fortunately, a one-size-fits-all approach towards the region was turned down, and
a more tailored toolkit was developed akin to the EU’s ENP ‘differentiated bilateralism’
approach.151 Arguably, the Strategy was the first clear sign of the EU’s readiness to
become a more active player in what was often called the ‘new Great Game’. For a
postmodern power like the EU, this did not come naturally, and remains a process in its
infancy. The very notion of geostrategic competition over a territory (in this case Central
Asia) with Russia, China and (in the background) the United States, is far removed
from the EU’s comfort zone, which hinges on notions such as ‘soft power’ and ‘climate
leadership’.
The EU’s Council Joint Progress Report (of its Central Asia Strategy, in 2008) was full
of praise for its dialogue-based initiatives, singling out Kazakhstan as a ‘model for
future “contractual relations” with other Central Asian countries’.152 However, apart from
dialogue and engagement, no concrete progress was made towards the EU’s normative
goals of human rights and the rule of law. As a result, the Strategy was criticised as
an impractical, fundamentally top-down, elite-driven scheme, full of conflicting and
unworkable goals. Although the EU did address the complete pre-1994 ‘policy void’ with
numerous documents and the appointment of ‘Special Representatives’, no coherent,
truly strategic EU policy approach emerged that could match (let alone challenge) the
role played by either Russia or China in Eurasia.
150 Council of the EU, The EU and Central Asia: Strateg y for a new Par tnership, May 2007. http://register.
consilium.europa.eu/doc/sr v?l=EN& f= ST%2010113%202007%20INIT (acces sed July 2015) .
151 Del S arto, R . and Schumacher, T. 2005. ‘ From EMP t o ENP: What’s at Stake w ith the Eur opean
Neighbourhood Policy towar ds the Southern Mediterranean’, European Foreign Affairs Review, 10 (1), 17-38.
152 European Commission, 2008. Joint Progr ess Repo rt by the Co uncil and the Europe an Commi ssion to the
Europe an Counc il on the imp lementation of the EU C entral As ia Strategy, June. http://trade.ec.europa.eu/
doclib/docs/2008/october/tradoc _141166.pdf (accessed July 2015) .
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In 2015, another attempt was made at revitalising the EU’s Central Asian Strategy.153
The June European Council adopted a document that acknowledged the rapidly
‘altering geopolitical situation’ in the region and the need to deal with ‘existing regional
synergies’ (whatever that might mean). It also mentioned the need to improve the
EU’s differentiated approach, implicitly questioning the EU’s natural penchant to look
favourably on all moves towards ‘multilateralism’. The EU was set to strike a careful
balance between differentiated bilateral ties with Central Asian countries and support
(where necessary) for regionalism and (supra-regional) multilateralism. The new EU
Special Representative Peter Burian suggested that the ‘revised strategy provides
increased engagement with the region through more flexible cooperation formats and
a budget for bilateral and regional cooperation formats of more than €1 billion, an
increase of 56%’.154
Yet the 2015 Strategy retains many structural defects. The EU’s objectives and priorities
remain fundamentally unchanged (‘fostering the stable, secure and sustainable
development of the region’). It also remains vague on the geopolitical dynamics within
the region and ignores crucial institutional innovations like the SCO and the Eurasian
Union. As far as the latter is concerned, the lack of a stronger strategic drive on the
part of the EU stems from a rather deliberate policy choice made by virtually all the
institutional branches of the Union,155 given the ongoing tensions over Ukraine. The
Eurasian Union is mostly seen as a brainchild of the Kremlin and the EU is unwilling
to go beyond the current framework of technical dialogue and informal cross-
institutional (mostly EEAS [European External Action Service]-Commission) ‘ontological’
discussions, fearing the unwanted legitimising side-effects that any step towards more
comprehensive multilateral initiatives could have. Quoting a senior EU official,156 as
things stand now, the Eurasian Union is a ‘non-factor’ on the EU agenda, with bilateral
relations with Russia dominating the scene for the foreseeable future. Therefore,
it should come as no surprise, that the Eurasian Union and its role in Central Asia have
not been taken into account in the context of the EU’s Central Asia strategy. Apart from
expressing a greater interest in Central Asia, the EU’s strategy remains inadequate to
support Europe’s interests (and values) in a region of growing importance and to explore
new possibilities of working with China and other regional actors like Kazakhstan to
overcome dividing lines and competing regionalisms.
153 European Council, 2015. Council conclusio ns on the EU Strategy for C entral As ia, June.
http://www.consilium.europa.eu/en/press/press-releases/2015/06/22-fac-central-asia-conclusions/
(accessed July 2 015)
154 Quoted in Wit te, M. 2015. ‘Revised EU Strategy Increases Budget, Flexibility in Central Asia Relations,
Says EU Rep’, The Astana T imes, 1 Jul y. http://www.astanatimes.com/2015/07/revised-eu-strategy-
increases-budget-flexibility-in-central-asia-relations-says-eu-rep/ (accessed July 2015)
155 Interviews with EU of ficials , Brussels, Belgium, 1 July 2015
156 Ibid.
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Since the establishment of formal diplomatic ties between the EU and China in 1975,
a complex and multifaceted dialogue-based architecture has emerged.157 The 1985
agreement dealing with trade and economic cooperation remains at its core and has
been festooned with a wide variety of political, societal and cultural arrangements.
The EU’s relationship with China is lumbered with the same normative keel as Brussels’
ties with Central Asia, that is, based on the hope that economic exchanges will foster
open and democratic societies.158 The current architecture hinges on three main ‘high-
level dialogues’ involving economics and trade (since 2009) , a strategic partnership
(2010), and societal engagement (2012). These three pillars underpin all annual EU-
China summits, whose prestige has been bolstered by the launch of a Comprehensive
Strategic Partnership and the subsequent (and very ambitious) EU-China 2020 Agenda
for Cooperation (both agreed in 2013).
In its official dealings with China, the EU manages to almost ignore the role and position
of Central Asia. In none of the eight documents signed at the past EU-China summits
is the question of ‘Eurasia’ given attention. Moreover, the SCO is not deemed impor tant
enough to merit mentioning, which questions the EU’s understanding of the most
advanced multilateral framework in the region.159 In contrast, Beijing recently indicated
the value it places on the interplay between the SCO and its New Silk Road initiatives.
At the BRICS Ufa summit of July 2015, India and Pakistan were (after the green light
given by China) accepted as new SCO member states, reported as proving ‘to the
rest of the world that SCO is a truly open and equal platform (…) not an exclusive and
ambitious China-led “military alliance”’.160
China’s strategic thinking is, however, not matched by the EU and its member states.
Clearly, Europe’s elites remain largely Atlanticist in their strategic mentality and struggle
to envision new approaches to the ongoing eastward tilt of the global balance of power.
Given the broad strategic gap between the EU and China, it is hardly surprising that
(even after four years of high-level strategic dialogues) the EU-China partnership
has failed to produce anything beyond lofty statements garlanded by some marginal
initiatives (such as anti-piracy cooperation).161 Also, China’s engagement in Europe
157 EE AS, 2015. EU-China Dialogue Architecture, February. http://eeas.europa.eu/china /docs/eu_china_
dialogues_en.pdf (ac cessed July 2015).
158 Soto, A. 2012. ‘A Central Asian Dimension of EU -China Relations’, ISPI Analysis, no. 130, July, 3.
http://w ww.ispionline.it/it /documents/Analysis _130_2012.pdf (accessed July 2015).
159 Yee, A . 2009. ‘Engaging Central Asia: the EU-Shanghai C ooperation Organisation ( SCO) axis’, East Asia
Forum, 7 November. http://w ww.eastasiaforum.org/2009/11/07/engaging-central-asia-the-eu-shanghai-
cooperation-organisation-sco-axis/ (acc essed July 2015).
160 Kucera, J. 2014. ‘ What Doe s Adding India And Pakis tan Mean For The SCO ?’, EurasiaNet.org, 7 October.
161 Ber kofsky, A . 2015. ‘EU-China Secur ity Dialogue: Rhetoric Versus a Very Different Reality ’ http://cogitasia.
com/eu-china-securit y-dialogue-rhetoric-versus-a-very-different-reality/ (acc essed July 2015).
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seems to go mostly unnoticed to the majority of EU policy makers. For example, China’s
economic and financial interests in EU member states (including in the context of
linking Hungary and Greece to the New Silk Road) and developing economic interests in
Ukraine (at least before the crisis), have drawn little interest, let alone offered a basis for
consultation and cooperation.
5.5 Broader EU-China dialogue and cooperation in a new world
(dis)order?
As long as Russia continues on its present course of forming its own competing regional
form of integration and attempting to enlist China in its efforts to form a broader anti-
Western coalition, the EU could do much more towards closer cooperation with China to
at least alleviate some of the negative effects of these Russian policies:
– China’s own broader New Silk Road project offers areas of economic and financial
cooperation, not only in Central Asia but also in central and eastern European
countries, where Beijing’s interests have been explicitly signalled.
– The EU could do more to work with China in the context of multilateral organisations
as well. Just as EU member states have been joining forces with China in financial
organisations like the AIIB, the EU could attempt to work with China in stimulating
economic and financial cooperation with the SCO and SCO member states.
Depending on further developments in the SCO, the EU even could at some stage
envisage becoming an observer in that organisation.
– In this context, the EU could also start promoting technical assistance to overcome
divisions in trade relations and could work towards closer approximation of
standards, avoiding new trade barriers between competing regional integration
efforts. As China has a much greater interest in collaborating with the West,
including in financial and economic organisations, than in lining up with Russia in an
anti-Western coalition, this seems to offer some positive prospects. Even in Russia,
the prominent geopolitical expert Sergei Karaganov has recently suggested working
with the EU and China together in a broader, Greater Eurasian context.162
162 Kar aganov, S., 2015, ‘A Eurasian Solution for Eur ope’s Crises’, Project Syndicate, 16 Se pte mber.
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6 The EU’s Eurasian Union
challenge: provisional and
controllable
6.1 From tragedy to farce
Karl Marx famously argued that ‘Histor y repeats itself, first as tragedy, second as
farce.’ The history of East-West trade and institutional ties is replete with examples that
substantiate this claim. Since the founding of the USSR in 1922, the debate in the West
has swayed between fully-fledged engagement and containment, with a broad field of
ad hoc and unprincipled policy schemes in between. British Prime Minister Lloyd George
argued in the 1920s that political engagement with the Bolsheviks was opportune, as it
would bring ‘civilisation through trade’.163 Many Western countries adopted the opposite
approach, claiming that a policy of excommunicating and blackballing the USSR was
the only moral choice. During the Cold War, a similar debate ensued about the pros and
cons of West Germany’s Ostpolitik and the US approach of containment.
Clearly, the West’s relationship with Russia has moved forward – from tragedy to farce.
Although Russia is hardly the ideological and military enemy of the (still recent) past,
the echoes of the Cold War and the commensurate policy reflexes in both West and
East, are clearly noticeable. From a Western perspective, it is largely undisputed that
Russia (and President Putin in particular) is to blame for this return to the bad old days
of mutual distrust and recriminations, combined with a mounting threat of a new arms
race and proxy wars in Europe and beyond. Europe’s extreme right and left argue that
the EU is (at least partly) at fault for this new East-West conflict, as it has unwisely tried
to interfere in Russia’s immediate strategic vicinity by offering an Association Agreement
(AA) to Ukraine. In Russia, that blame is squarely laid on the West, which is said to be
insensitive to Russia’s legitimate geostrategic interests, using calls for democracy and
reform as the main instruments to instigate social unrest and regime change (through
so-called ‘colour revolutions’), and NATO and EU enlargement as strategies to encroach
upon Russia’s borders. Russia’s annexation of the Crimea and its suppor t for ‘rebels’ in
Eastern Ukraine have become critical evidence of Russia’s move away from Europe and
the West. This raises the classical (Russian) question as to the West’s approach towards
Russia: chto delat i kakim obrazom (or ‘what is to be done and how? ’).
163 Van Ham, P. 1991. Western Doctri nes on East-West Trade: Theory, His tory and P olicy, Basingstoke ,
Palgrave Macmillan.
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This Clingendael report has examined Russia’s motives and arguments for launching
a new regional institution, the Eurasian Union. Against the historical background of
many previous efforts to develop post-Soviet integration, the new Eurasian Union
exemplifies continuity rather than change. The Eurasian Union should be considered
as just another Moscow-driven initiative to keep as much control as possible over
what it still considers to be its ‘near abroad’. Up until now, the EU has always adopted
a strategic approach of encouraging multilateralism across the globe, assuming that
intergovernmental cooperation on a regional scale would contribute to stability and
set the stage for improved global governance. For this reason, the EU has been keen
to develop institutional ties with a flurry of world-wide collaborative efforts, ranging
from the African Union and ASE AN to MERCOSUR. However, until now the EU has not
developed a clear-cut approach to the Eurasian Union, partly because it is a very ‘new’
institution but mainly because the EU’s take on the Eurasian Union is part of its overall
approach towards Russia, Eastern Europe, Central Asia164, and, to a lesser extent, China.
EU policies have been publicly scrutinised (particularly the Eastern Partnership), but
have yet to be revamped and/or replaced by other, hopefully better, strategies. Simply
embracing the Eurasian Union as a prima facie regional organisation (even when it
supposedly attempts to mirror the EU itself), will therefore not work. Furthermore,
its character seems to differ fundamentally from regional integration efforts in other
areas of the world. Therefore, any new approach towards the Eurasian Union will (or at
least should) be embedded in a new, comprehensive EU approach towards its eastern
neighbours and the ‘neighbours of those neighbours’ or, in an even broader framework,
one that includes China as a strategic partner.
For the EU, as a global actor in trade and finance, the main aim should be to work
towards bringing together competing ‘regionalisms’ and overcoming new dividing lines.
As such developments are closely related to internal developments in other regional
and national actors, the EU should continue to support those forces working towards
greater convergence of trading and financial systems, especially when based internally
on further developing the rule of law and externally on acting in full respect of legally
binding international obligations, as set out in the framework of the W TO.
This repor t suggests possible elements of a new EU approach. However, we consider
they will be effective only if they form part of a long-overdue strategic overhaul of the
164 In HR CFSP Mogherini’s (le aked) Issues Paper on relations with Rus sia for the EU Foreign Af fairs Council of
19 January 2015, the same doubts on the EEU are articulated : “...some level of engagement with the Eurasian
Econom ic Union ( EEU) has bee n suggest ed. Euras ian integ ration is a major forei gn policy i nitiati ve and priority
of Russi a, but als o has a direc t impact on t he scope of t he EU’s economic rela tions with Russia’s integration
partners, such as Kazak hstan, B elarus an d Armenia . Geopol itical and other considerations als o need to be
taken int o account , includ ing the non-negotia ble principle of fre e choice fo r all partners in th e common
neighbourhood”; see: http://blogs.ft.com/brusselsblog/files/2015/01/Russia.pdf.
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EU’s place, role and policies in a rapidly changing geostrategic global environment. The
suggested elements should be reflected in the EU’s new Security Strategy – which is
to be adopted by the middle of 2016 – and in a new, more differentiated, approach to
the European Neighbourhood Policy(taking also into account partner states’ relations
with the ‘Neighbours of the Neighbours’). For the EaP countries, this would also include
dealing with their continuing dependence in their energy, trade and labour relations with
Russia, as indicated in our present report.
In this repor t we have touched only briefly on energy relations, as this is currently not
an area in which the EEU as such is a real player, unlike some of its constituent member
states. Furthermore, we have not dealt with some of the broader security and defence
aspects, which are also not within the competences of the new Eurasian Economic
Union, although we fully understand that in Russia’s geopolitical mind-set everything is
interconnected. However, such aspects should be dealt with in the EU Security Strategy,
in synergy with the more economic elements of relations with the EEU and its member
states mentioned here.
In outlining the three options that we envisage as possibilities for the EU in dealing
with the Eurasian Union, we will also indicate the contribution each option could make
towards a settlement of the present crisis around Ukraine.
6.2 Three options, one choice
As the EU’s most important eastern neighbour, Russia will always have an impact on EU
interests in the prosperity and security of its neighbourhood and the wider European
and Eurasian continent. Against this background, the EU basically has three options
in its approach towards the new Eurasian Union, depending on how it structures its
relationship with this Russia-dominated organisation. These options would always
feature a mix of cooperative and confrontational policy elements, depending on whether
Russia is considered a (strategic) partner or an isolationist or even neo-imperial power.
The first option is a strategy of ‘Full Engagement’ based on a new ‘strategic partner-
ship’ between the EU and the Eurasian Union (and Russia) . This would de facto amount
to a Russia-first approach, as most official institutional ties are likely to be conducted
with and through Russia and/or Russia-controlled institutions. The second, a strategy
of ‘Tentative Compatibility’, would shy away from a new, full par tnership and would
instead opt for an ad hoc and more technical relationship, keeping dialogue and options
open for times when there would be a better perspective for closer engagement.
The third option is that the EU could go along with Russia’s narrative of emerging
‘Competing Unions’, adopting a competitive (and at times even combative) stance
towards the Eurasian Union, embracing a tough geopolitical approach and openly
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vying for spheres of influence, even challenging Russia in its direct vicinity and de facto
forcing countries to choose between the two regional integration processes.
A strategy of Full Engagement would accept the logic of Lloyd George and the
proponents of old-style German Ostpolitik of the benefits of complex interdependence,
assuming that Russia is simply too large and too important to be isolated and ostracised.
It assumes that although Russia is clearly in the lead and the primus inter pares within
the Eurasian Union, closer cooperation with the EU would still offer (and hopefully even
expand) room for political manoeuvre of its other members. To some, it may be the
better choice, as the EU (and the West in general) has very limited options to influence
the foreign policy choices of Russia and other EEU member states, accepting the current
strategic division as a fait accompli. A new partnership would certainly be considered
as a very opportunistic approach, accepting that Russia is to be dealt with as it is rather
than how the West prefers it to be165. This would also imply acceptance of Russia’s
present internal regime, which is driven by a more isolationist and anti-Western course
and neglects those voices inside Russia pleading for more open economic engagement
with the world at large along the lines of the different Modernisation Partnerships
concluded under President Medvedev. It would also mean accepting Russia’s present
position on its own ‘spheres of (exclusive) interest/influence’, including on Ukraine,
along with refraining from actively suppor ting those Eastern Neighbours that are making
a clear pro-European choice and striving for the adoption of a liberal-democratic system
based on the rule of law. For Ukraine, the only way out would be to fully accommodate
Russian economic (and political) demands, dropping any European and/or transatlantic
aspirations and building a relationship with the Eurasian Union as a full member or at
least as an ‘observer’. It would accept the limits in the EU’s capabilities to think and act
‘strategically’, realising that within the EU there are (too) many different priorities and
interests that need to be aligned before a much-needed new, comprehensive strategic
approach could be devised and implemented, and that such priorities (migration,
consolidation of the Euro) are more important than a sustained confrontation with
Russia, who is also needed as a partner in other areas, like the Middle East. Finally, it
would seriously damage the credibility of the EU as a foreign policy actor – unable to
influence policies even in the ‘shared neighbourhood’ and being forced to a volte face
in its relations with Russia, after having abandoned its previous “strategic partnership”
because of Russia’s aggressive policies towards Ukraine.
Policies based on Tentative Compatibility accept these limitations within the EU (and its
member states), and acknowledge that ‘something needs to be done’ swiftly, satisfying
the essential need for a common approach even in the absence of such a strategic
overhaul. One of the elements of such an approach would be to investigate whether
165 Support for policies fair ly close t o “full engagement” c an be found e.g. in: Kr astev,I., Leonard, M., 2014,
‘The New European Disorder’, ECFR Essay, 20 November.
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(and how) countries in the ‘shared neighbourhood’ of the EU and Russia can keep their
options open, choosing the best of both worlds, out of either economic necessity or
political choice. This would be a ‘no choosing, no losing’ strategy for the EU, based on
the assumption (which is not yet a given) that countries can have a DCFTA with the EU
and still remain part of some broader framework in the East, like the CISFTA. This could
only work if the EU and Russia were both willing to step up their commitments to lower
the many hurdles that prevent the harmonisation of standards, and if they were willing to
take other practical steps towards greater systemic approximation and even leave open
the possibility of a greater convergence in the future. Such a predominantly ‘technical’
dialogue between the EU and the Eurasian Union could be politically feasible, even in
today’s dire geopolitical circumstances. Moreover, as the EU’s Association Agreements,
the EEU and the CISFTA are supposedly all working within the WTO’s existing legal
framework, technical compromises and working arrangements seem altogether possible
if the political will is there to move forward, including on the economic aspects of
relations between the EU, Russia and Ukraine. Such an arrangement could at least
partially satisfy the needs of those in Russia and other EEU member states who see their
interests being best served by modernising the economy and society in order to better
take part in a modern, globalised world order. For the EU, this would also imply that the
Eurasian Union (as another Customs Union) will not be the only new partner in dialogue,
but that simultaneously a dialogue will be started with all countries (including Ukraine)
participating in the CISFTA, with the aim of exploring possibilities of working towards
a broader pan-European free trade area of some sorts. For Ukraine, this could mean a
broadening of the playing field, wherein Russian influence is diminished and other large
(and more moderate) partner states, like Kazakhstan, could also make their views better
heard.
The third approach would accept Moscow’s narrative of emerging Competing Unions,
with the EU embodying the postmodern world of post-sovereignty and the EEU the ‘old’
world of geopolitics and spheres of interest. This option assumes that the EU and its
member states would be able and willing to confront Russia head on, accepting that
they lack ‘hard’ security escalation dominance if and when things got out of hand (in
which case the EU would need to depend even more closely on NATO and the US as
ultimate guarantors of hard security interests on the European continent). However,
it would also be based (at least partly) on the presumption that economically Russia
is the lesser (even declining) power that can be influenced by tough economic and
financial sanctions to eventually mend its ways and change its present revisionist and
protectionist course. It assumes that the coming years will most likely decide the new
dividing lines on the continent, and that the EU has a small window of opportunity to
use the current strategic fluidity in Eastern Europe to entice countries to lean westward
and give full suppor t (also financially) to their pro-European policies. This approach
would also entail the EU taking much greater responsibility towards Eastern Partnership
countries, providing them with full economic and financial support in making the
reforms work and reorienting their economies in a westward direction. As for Ukraine,
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it would mean full acceptance of Kyiv as a European partner, potentially even offering
EU membership in the longer term. Inevitably, this approach would lead to growing
enmity with Russia – as Moscow would certainly enact retaliations against Ukraine and
other pro-European states, seriously hampering their economic and energy security
prospects, and possibly influencing in a negative way cooperation with the EU on other
issues of common concern (like Syria, Iran, fighting Jihadism, etc).
We suggest that, on the basis of the pros and cons of the three options, the EU has
only one viable choice – a strategy of Tentative Compatibility, based on the search
for greater room for manoeuvre within the remit of technical cooperation initiatives. This
could gradually lead to broader cooperation, depending on Russia’s readiness for such
an engagement (based on international law) in a more global context. In the meantime,
options should be left open as much as possible and no irreversible decisions should
be made over a future global configuration characterised by closed regional trading
blocks. The idea is basically to keep the EU united and play the long game with Russia,
displaying strategic patience and waiting for Russia to return to a more cooperative
position, based on greater convergence between the two systems concerned. There is
no reason for the EU to try to forge a normative compromise with Russia based on a
sell-out of its own principles concerning an international world order based on respect
for the sovereignty and territorial integrity of independent states and international legal
obligations in general.
6.3 Overcoming strategic purgatory in a shared neighbourhood
As our analysis of the case of Ukraine indicates, it remains complicated to keep strategic
options open and maintain a balance between two free trade-cum-customs unions as
offered by both the EU and the Eurasian Union. When Ukrainian President Yanukovych,
as most previous Ukrainian presidents had done before him in a similar multi-vector
approach, tried to do exactly that, it eventually resulted in his downfall and set the
dramatic process in motion of his country’s discomfiture, as Russia had already formed
its reinforced policy towards the ‘near abroad’: countries had to make an either-or
choice between two fundamentally incompatible competing integration projects. The
EU seemed to somewhat echo this narrative when European Commissioner Stefan Füle
stated that, ‘You cannot at the same time lower your customs tariffs as per the DCFTA
and increase them as a result of the Customs Union membership.’166 However, for the
EU, the possibility of combining free trade unions always remained open and Brussels
never forced any country to sign an Association Agreement (cum DCFTA). Whereas
Russia threatened other Eastern Partnership countries with sanctions and a withdrawal
166 Füle , S. 2013. Statement on the pressure exercised by Russia on countries of the Eastern Partnership,
European Parliament Plenar y, Strasbourg, 11 September.
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of trading and energy benefits, the EU accepted without any major problems Armenia’s
choice of not signing the DCFTA and adopting Eurasian Union membership.
For the EU, it remains the priority to develop a flexible and differentiated set of policies
towards countries now residing in this strategic purgatory, in between the blunt reality
of strong (geo)economic ties with Russia and the (still tentative) political desire to join
‘Europe’ or ‘the West’, even though the political trajectory to the end goal remains vague
and thorny. The EU has wisely (if slowly) been adopting such an approach in its Eastern
Partnership, gradually accepting that each partner country has its own idiosyncrasies,
good and bad, and its own relations with Russia, which still – to varying extents – matter.
Effective policies need to be tailor-made, not one-size-fits-all. This conclusion can
already be drawn from the consultations and discussions so far on a renewed European
Neighbourhood policy, based on the joint paper by the High Representative for the
Common Foreign and Security Policy (CFSP) and the European Commission presented in
March.167 Furthermore, in the context of a new neighbourhood policy, possibilities could
be explored for developing some multilateral regional platforms as well, which could
engage interested ‘neighbours of the neighbours’, including Russia and Kazakhstan
(and maybe even China).
Should this not work, another option might be for EU member states to raise the
security implications of diverging regionalisms in Europe in the context of the OSCE’s
(Organization for Security and Co-operation in Europe) second pillar of economic and
environmental security. This could also give more impetus for a broader discussion,
involving all European and transatlantic partners, and would fit into the present
discussions about renewed relevance of the OSCE.
Such flexibility should also be extended to the EU’s approach towards the EEU and other
multilateral frameworks like the CISFTA as well. A few examples highlighting some of
the ongoing trends in EEU countries, and how they resonate with current debates in
EU institutions and EU member states, would add further weight to our arguments in
favour of the preferred more ‘technical and less politicised option’ (see table below for
a summary). However, the big problem with this option (as with the others) is that it is
Russia that is politicising the issue. There are clear limits as to how far technical answers
can be given to political questions, as that ultimately depends on the willingness of the
Kremlin to find a way out of its self-generated political quagmire.
Apart from a new multilateral track, the EU could also reinforce its bilateral approach
towards EaP and EEU member states alike. As emphasised throughout this report,
virtually all Eurasian Union members aside from Russia have, to varying degrees,
167 European Commission and HR of the EU for Foreign Affairs and Security Policy, Joint consultation paper:
Towards a new E NP, March 2015.
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been following a multi-vector foreign policy, keen on reaping the maximum amount
of the unquestionable benefits stemming from doing business with the EU without
triggering the retaliatory ire of Moscow. Indeed, they are generally willing to find
policy arrangements to sidestep the objective incompatibility between the two (EU
and EEU) Customs Unions and to retain as many options as possible to develop closer
forms of cooperation and even systemic economic convergence at a later stage. In the
case of Armenia, despite the last-minute turnaround against the DCFTA, Yerevan is
nevertheless still showing its openness to strengthening its ‘technical’ ties to the EU,
and experts and practitioners on both sides have been calling for the drafting of a new
agreement between the EU and the Caucasian country. Such an agreement would take
the form of an ‘AA-minus’, that is an Association Agreement leading to an FTA devoid of
all the ‘deep and comprehensive’ (i.e., politically more sensitive) provisions. According
to competent officials, the EU has completed a so-called ‘scoping exercise’ for a future
agreement and negotiations are due to start as soon as possible. The discussion over
the AA-minus provides evidence in favour of the technical compatibility strategy, which
falls short of full engagement but at the same time rejects the dangerous (especially for
the smaller Eurasian Union members) logic of Competing Unions. Similarly, the recently
initialled enhanced PCA between the EU and Kazakhstan falls within the remit of a
strategy seeking to selectively deepen bilateral relations, in line with the ‘compatibility’
option outlined above.
Moreover, improved technical compatibility might also be acceptable to Russia
itself, as it could in the longer term leave open the option of a ‘Greater European
FTA’ that, as proposed earlier by (then Prime Minister) Putin, could stretch ‘from
Lisbon to Vladivostok.’168 That would especially be the case if, in the longer term, ‘pro-
modernisation’ forces among Russian elites regained some of their earlier influence on
decision making in the Kremlin. While the current geopolitical situation (also in light of
the advanced transatlantic negotiations over the signing of TTIP) makes its realisation
very unlikely, and would imply a fundamental change in Russia’s present narrative of
Competing Unions, it still seems to have some support among Russia’s political and
economic elite, although even one of its most prominent proponents, former Foreign
Minister Igor Ivanov seems to have recently turned more pessimistic on its prospects.169
168 Donahue, P. 2010. ‘Putin Promotes Trade Zone From ‘Lisbon to V ladivostok’’, Bloomberg, 25 November.
http://w ww.bloomberg.com/news /articles/2010-11-25/putin-promotes-trade-zone-from-lisbon-to-
vladivostok-update1- (accessed Augus t 2015).
169 For example, pr ominent think-tankers at RIAC (Russian International Affair s Council – see
http://russiancouncil.ru/common/upload/GreaterEurope17en.pdf) and high-ranking political figures such
as the Duma President Naryshkin and the Russian Ambassador to t he EU Vladimir Chizhov (see http: //
www.russianmission.eu /en/news/eurasian-economic-union-ambassador-vladimir-chizhovs-interview-
euobserver); see also: Ivanov, I., 2015, ‘The Sunset of Greater Europe’, speech at the 20 th Annual
International Conference of the Balti c Forum, 12 September.
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Therefore, it could be argued that the extremely complex EU-Russian dialogue is being
kept alive by more ‘technical’ discussions, leaving the broader and more political issues
for later stages.170
If the EU were to succeed in its discussions with Russia to broaden any dialogue
between the EU and Eurasian Union to involve the other EEU member states on an equal
footing, it would also address some of the latter’s concerns about Russian-dominance
and might make Russia somewhat more receptive to their ideas. Ultimately, this would
be a good test-bench of the EU’s ability to simultaneously combine multilateral and
bilateral policies.
As far as the Brussels-based EU policy debate is concerned, it is first of all important
to underline how very few concrete steps have been taken so far with regard to any EU
institutional initiatives towards the Eurasian Union. Still, the dominant ‘pulse’ among EU
officials seems to be decidedly leaning towards a strategy of Tentative Compatibility.
The EU is in no hurry to institutionalise any form of full engagement with Moscow-led
initiatives, considering the very high degree of politicisation attached to Kremlin-relevant
issues in the wake of the Ukraine crisis. Such reticence also stems from the fact that
Eurasian Union members (apart from Russia) are among the fiercest critics of such an
approach, as they want to retain as much negotiation independence as possible without
being ensnared in a multilateral framework that would increase their foreign policy
vulnerability to Russia. At the opposite end of the strategy spectrum, there is also very
little appetite in Brussels for overt regional competition, which should not come as a
surprise given how much the EU has at stake when it comes to its Russia policy. Unlike
the United States, whose energy independence from Moscow allows it to focus on
Russian initiatives from a predominantly security standpoint (and therefore, as stated by
Hillary Clinton in 2012, to ‘dismiss’ the Eurasian Union as a neo-imperialist reconstitution
of part of the Soviet empire) ,171 the EU and its member states have to take into account
a much broader array of economic and financial interests, and have much to gain from
a more open approach that could lead to greater convergence of the two regionalisms.
Overall, it looks as if the Europeans are slowly growing into a more ‘Chinese’ way of
conducting their Eurasian policies (see Chapter 5), increasingly relying on technical
pragmatism and targeted bilateral deepening of ties with each relevant country in the
region. Building on this ‘Chinese’ Eurasian approach, a good way to further bolster the
compatibility strategy would entail stepping up cooperation with the SCO, which is
170 Support for a pragmatic approach seeking to avoid all-out bipolar confrontation rather than striving
for normative convergence can also be found in Ivanov, I. 2015. ‘The Sunset of Greater Europe’, RIAC,
17 September.
171 Clover, C. 2012. ‘Clint on vows to thwart new S oviet Union’, Financial Times, 6 December. http://ww w.ft.com/
cms/s /0/a5b15b14-3fcf-11e2-9 f71-00144feabdc0.html# axzz3jLIkaFen (accessed August 2015).
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lacking so far (see Chapter 5.4 above). EU-SCO relations should undergo a thorough
revision aimed at improving coordination and collaboration on sectoral (i.e., ‘technical’ )
issues, so as to add a valuable multilateral platform to the range of engagement
instruments at its disposal in the region. The facilitating role of the SCO could prove
all the more significant in light of the recent ‘softening’ of Moscow’s stance towards
its expansion and economic upgrade, therefore further increasing its potential for the
enhancement of EU ‘actorness’ in Eurasia.
This could be one of the elements of a more strategic discussion with China, aimed at
closer cooperation with Beijing’s New Silk Road initiative and based on Chinese interests
in closer financial and economic cooperation with the EU, EU member states and even
some Eastern Partnership countries. If the EU could ensure some role for China in
any multilateral format of a renewed Eastern Partnership, China could in return give
the EU a seat at the table (as an observer) in the SCO, to be centred less on security
cooperation and more on economic and financial cooperation. By broadening the
playing field to discuss issues in a Greater Eurasian context, ways could be explored
to prevent any wider divergence between competing regionalisms. Such competition
and confrontation might in the short term be in Russia’s interests; they are certainly in
neither EU nor Chinese interests.
Although most EU member states remain discreet about their preferred approach
towards the newly emerged EEU, most signals indicate that a strategy of Tentative
Compatibility is both feasible and likely. For example, during her speech at the 2015
World Economic Forum in Davos, German Chancellor Angela Merkel argued that
Germany was ‘ready to open talks about possibilities for co-operating in a collective
trade area’. Germany’s Minister for Economic Affairs and Energy Sigmar Gabriel further
underscored the value of such a technical offer as a Western bargaining chip in ongoing
negotiations with Russia.172 However, there are still fundamental doubts as to when
the Kremlin will start to look at the present crisis from a more economic and financial
perspective. At present, ever ything seems to be viewed through the prism of keeping
the regime in power and any economic or financial argument appears to be trumped
by security considerations. Maybe, in the longer run, sanctions and a continuation of
slumping oil prices will force a fundamental Kremlin rethink. As things stand now, any
discussion should be informal, technical and aimed at keeping options open for future
renewed engagement.
172 ‘Merkel and Gabriel offer Russia fr ee-trade agreement’, Deutsche Welle, 23 Januar y 2015. http://www.
dw.com/en/merkel-and-gabriel-offer-russia-free-trade-agreement/a-18211951 (accessed Augus t 2015).
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Support for more pragmatic dialogue with the EEU, Russia and EEU member states could
also resonate in the Netherlands, the country that will hold the EU’s rotating presidency
in the first half of 2016. It would fit in with the present Dutch approach towards Russia,
which combines a tough line on sanctions and reassurance of Central/Eastern European
NATO partners with keeping open channels of communication and selective dialogue
and engagement. It is also in line with the outcome so far of debates within the EU on
Russia policy, a new Eastern Partnership and the new Central Asia strategy. What is
still lacking is a broadening of the debate to discuss Greater Eurasian issues with Asian
partners (first and foremost China) as well. That could be a separate building block for
the EU’s renewed European Security Strategy, to be agreed during the Dutch presidency
next year.
Table 3 EU strategies towards the EEU
FULL ENGAGEMENT TENTATIVE
COMPATIBILITY
COMPETING UNIONS
MAIN TENETS – Complex inter-
dependence scenario
– Russia as a primus
inter pares in Eurasia
– Technical cooperation
– Deep ening of bilat eral
ties with EEU members
– ‘Spheres of
influence’ logic
– Direct confrontation
betwe en postmodern
EU and geopolitically
‘old’ EEU
MAIN POLICIES – Development of
a comprehensive
EU-EEU s trategic
partnership
– AA-minus
– Enhanced PCAs
– Free trade areas
– Improved EU-S CO
cooperation
– Expansion of the CU
– AAs/DCFTAs
ADVANTAGES – Makes up for EU lack
of geopolitical clout
– Geop olitically viable
– Best cost/benefit ratio
– Improves EU
‘actornes s’
– Conveys a ‘strong’
image of the EU
OBSTACLES – EEU members ar e
against
– Damages the
credibility of the EU
as an actor
– Difficult to decouple
the technical side
from the political
implications of the
issues
– Dangerous for EEU
(and EU) members
(Russian retaliation)
– EU unlikely to win in
a new Great Game
EFFECTIVENESS
RAT IO
(Achievement of EU
goals/Feasibility)
– Low/Low – Medium/Medium – Medium/Very low
In conclusion, it is fair to say that our call for Tentative Compatibility with the Eurasian
Union is pragmatic, viable and cautious. In general, such qualities reflect values much
prided by politicians, and for good reasons. Although the Eurasian Union may not be
‘dead on arrival’, there are certainly few indications that it will go some way beyond its
political infancy. Most likely, President Putin or one of his autocratic colleagues will find
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From Competition to Compatibility | Clingendael Repor t, October 2015
ways to suffocate the organisation with bureaucracy and block its efficacy with national
recalcitrance. This we know and can reasonably expect.
Still, in the coming years the EU will have to deal with the reality of the Eurasian Union’s
existence, using the few opportunities it offers for the EU’s benefit and limiting its
disadvantages. Full engagement is politically inoppor tune and strategically unwise;
it would simply make the EU appear untrustworthy and would consolidate Russia’s
hold over its ‘near abroad’. The EU should equally avoid a future of Competing Unions,
not only because there are unlikely to be real winners in a new Great Game but also
because the EU is notoriously bad at engaging in geostrategic competitions, due to its
postmodern (and hence anti-realist) disposition.173
Over the next few months, the EU and its member states should instead devise policy
options in the context of both a renewed Eastern Neighbourhood policy and a more
strategic engagement with China, which could at least partly bridge the gaps between
the emerging competing regionalisms and ensure that options are kept open for closer
cooperation and convergence in future. A smart combination of broader multilateralism
and a more focused bilateral approach might just do the trick.
173 Interestingly, pro- compatibility views are also promoted by some US pundits arguing in favour of a
compromising deal between Russia and the West, for t he sake of short-term s tabilit y and peace, and in light
of Moscow’s long-term weakness. Suc h a deal would e ssentially shelve s ome of the Wes t’s more politically
sensitive interests (e.g., NATO backing off fr om any expansionary project s in Eastern Europe , gradual lif ting
of the sanc tions, etc.), and would ent ail proac tive EU-Russia cooperation on the issue of compatibility
betwe en Ukraine’s partic ipation in both the EU and EEU projects (for fur ther details see O’Hanton, M . and
Shapiro, J. 2014, ‘Craf ting a win-win for Russia, Ukraine and the West’, The Washington Post, 7 December).
76
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77
List of abbreviations
AA Association Agreement
AIIB Asian Infrastructure Investment Bank
BRICS Brazil, Russia, India, China and South Africa
CFSP Common Foreign and Security Policy
CIS Commonwealth of Independent States
CISFTA Commonwealth of Independent States Free Trade Area
CU Customs Union
DCFTA Deep and Comprehensive Free Trade Agreement
EaP Eastern Partnership
EEU Eurasian Economic Union
ENP European Neighbourhood Policy
EU European Union
EurAsEC Eurasian Economic Community
NDB New Development Bank
OSCE Organization for Security and Co-operation in Europe
PCA Partnership and Cooperation Agreement
SCO Shanghai Cooperation Organization
WTO World Trade Organization
