COMMENT: The rise and fall of the Eurasian Economic Union

By bne IntelliNews January 12, 2015

Mark Adomanis in Washington -


The Eurasian Economic Union (EEU) is an idea that looks great on paper. Clearly based on the European Union’s successful efforts to break down economic and trade barriers between its members, the EEU was supposed to create unified markets in capital, labour and goods. It was, to ape a famous phrase, technocratic capitalism with Russian characteristics.

The EEU was (obviously) not an elixir for the economic problems of the former Soviet Union. In moments of truth even its most fervent advocates would admit as much. By itself, the EUU had no authority to do anything about the insecure property rights, corrupt bureaucracies and weak judiciaries that place such a heavy burden on business throughout the post-Communist world. Even if everything went according to plan, administrative pressure on the private sector was going to remain a very significant problem.

However, to the extent that mutually beneficial economic exchange makes the world just a little bit better, the EEU was a small step in the right direction. I’ve yet to hear from any of the more skeptical voices – upon its announcement the EEU drew reactions from the Western foreign policy establishment that ranged from sputtering outrage to simple contempt – about how maintaining the status quo would have helped anyone. It seems pretty clear that substantial tariff barriers between, say, Armenia and Russia or barriers to capital between Kazakhstan and Russia weren’t actually a good thing. If the EEU successfully removed such barriers, then it would be better than nothing.

Soviet reincarnation

Western critics of the EEU, most prominent then US secretary of state Hilary Clinton, proclaimed that it was nothing more than an attempt to re-animate the Soviet Union’s rotted corpse. In this understanding the EEU was a wolf in sheep’s clothing, a vehicle for Russian imperialism dressed up as an economic arrangement. Any country unlucky enough to be caught in its grasp would soon be under Moscow’s direct control.

On a certain, surface, level this analysis had some plausibility. Vladimir Putin and the Russian government clearly are keen on expanding their influence throughout the former Soviet space. It is fair to say that the EEU was part of a larger and more comprehensive effort to return Moscow to a privileged position of regional leadership. The problem, however, is that such critiques did not take into account the nature of the governments which were actually involved.

One can say a great many things about Belarusian President Alexander Lukashenko or Kazakh President Nursultan Nazarbayev, the other two leaders who were instrumental in drawing up the blueprints for the EEU. By most independent reckonings, the governments over which they preside are even more repressive than Russia’s. One thing one can absolutely not say about them, however, is that they are in any hurry to yield even an ounce of real power. Ever since they first came to power, they have painstakingly put themselves in positions of supreme influence in their own countries, and have studiously worked to undermine any and all potential challengers. It beggars belief to think that either Lukashenko or Nazarbayev would yield power under any but the most apocalyptic circumstances.

And so the EEU was faced with a simple but potentially existential problem: its success was predicated upon it not being viewed as a vehicle for Russian imperialism. It would only work if it were received in Minsk and Astana as a “rising tide lifts all boats” bit of technocratic economic governance.

But ever since Russia’s annexation of Crimea, both Belarus and Kazakhstan are (quite understandably!) wary of Russian intentions and they are increasingly balking at the deeper economic integration that is the EEU’s job to accomplish. There has been increasingly blatant signs of push-back on the part of both the Kazakh and Belarusian governments. According to the Financial Times, Belarus even went so far as to reinstate previously dismantled border controls.

Russia is more powerful than either Belarus or Kazakhstan, but it is not so much more powerful than it can simply force them to do whatever it wants. The EEU can only work if the other governments are willing participants, and Russian behaviour has convinced them that the risks of participation far outweigh the benefits.

Russia faces a very difficult, and at this point probably impossible, struggle to convince its partners that the EEU is compatible with their sovereignty and economic well-being.

It’s not too simplistic to say that we can now count the EEU among the victims of the war in Ukraine. 

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