The EU, Russia and the “Contested Neighbourhood”: Moving Beyond Rival Region-Building Projects?

Photo via CreativeCommons: © European Union 2014 - European Parliament

The Europe-Russia Blog Series, “EU, Russia, and Ukraine: Managing and Moving Beyond the Stalemate”, disseminates research, analysis and commentary on issues relevant to contemporary EU-Russia and Ukraine relations. Launched in April 2016, the series publishes contributions by members of the Dahrendorf Russia and Ukraine Working Group, as well as guest contributions from academics and practitioners. In this blog post, Laure Delcour analyzes the various economic alliances within the “contested neighbourhood” of EU and Russia.

In recent years, developments in Eastern Europe and the South Caucasus have been shaped by the successive emergence of two deep economic integration projects driven by external actors – the Eastern Partnership launched by the EU in 2009, and the Eurasian Customs Union (ECU) that was launched in 2010 by Russia, Belarus and Kazakhstan and upgraded in 2015 to a Eurasian Economic Union (EAEU). Participation in the ECU/EAEU, however, is incompatible with acceptance of EU offers for a Deep and Comprehensive Free-trade Agreement (DCFTA). This is primarily because membership of the Russia-led Eurasian Customs Union implies a loss of sovereignty over trade policy and sets common tariffs which are incompatible with the elimination of tariffs planned under the DCFTA.

A fractured neighbourhood…

As a result, the ‘common neighbourhood’ has increasingly turned into a ‘contested neighbourhood’ that appears fractured between the EU’s Eastern Partnership and the Russia-driven Eurasian Economic Union. Whereas Georgia, Moldova and Ukraine have all signed association agreements and  DCFTAs with the EU, in early 2015 Armenia joined Belarus in the newly-created EAEU.

Yet there is only limited scope for a dual experiment. The Eastern Partnership and the Eurasian Union can hardly be reconciled in their current forms. This is not only due to mutual incompatibility regarding tariffs. In essence, the two projects are drastically different. Although its approach is overly technocratic and narrowly focused on regulatory convergence, the EU offers integration with its own standards and rules on a voluntary basis. In contrast, Russia has frequently used coercion to ‘induce’ countries to join the Eurasian Union. This was the case with Armenia in 2013. Russia has also ruthlessly retaliated against countries (primarily Ukraine) which have engaged in an association process with the EU. Finally, Russia’s reintroduction of customs checks at its border with Belarus (in the context of Russian counter-sanctions in response to EU sanctions in 2014) only signals that the EAEU is not a rule-based integration process.

…Or a patchwork of influences?

Despite the incompatibility of their deep economic integration schemes, both the EU and Russia maintain close links with all six countries- regardless of their respective degrees of engagement with the two rival economic integration schemes. On the one hand, countries bound to the EU by association agreements remain tied to Russia by multifaceted interdependencies.  So far, however, Russia’s trade bans and punitive measures introduced against Moldova and Ukraine have only resulted in limiting trade flows with Russia. On the other hand, despite being members of the EAEU Armenia and Belarus are still part of the European Neighbourhood Policy. For example, in December 2015, the EU opened negotiations for a new legally-binding agreement with Armenia. Two months later, the EU’s Council of Ministers’ decision to lift the bulk of EU sanctions against Belarus signalled the opening of a renewed dialogue.

This suggests that a multi-layered and multifaceted patchwork of influences is currently taking shape in the region. This is crucial for Armenia and Belarus which have sought to balance both the EU’s and Russia’s influence (albeit to varying degrees). Yet this may not be good news for Georgia, Moldova and Ukraine, since Russia has exploited and will likely continue to exploit interdependencies to punish them for integrating with the EU.

Maintaining engagement with all six Eastern Partnership countries: a delicate balancing act for the EU

So under what conditions can the EU and Russia coexist in the “contested neighbourhood”?

For the EU, engaging with the three Eastern Partnership countries which have not signed an association agreement is a delicate balancing act. Armenia’s and Belarus’s relations with the EU are not only constrained by their EAEU-membership, but also by Russia’s clout over their respective domestic politics and unwillingness to let them conduct autonomous foreign policy. EU relations with Azerbaijan (the only country which has refused to join either of the two integration schemes) have sharply deteriorated in recent months, after the European Parliament adopted a resolution condemning the authorities’ crackdown on Azerbaijani civil society and human rights activists.

Even with respect to the three associated countries the EU’s challenge is huge. Russia’s hybrid warfare in Donbass continues to pose a major threat to Ukraine’s statehood and therefore to the country’s capacity to reform. Moreover, in both Ukraine and Moldova, entrenched vested interests, rent-seeking practices and pervasive corruption increasingly appear as major obstacles to EU-demanded reforms within the framework of association agreements and DCFTAs. George, in a context of sharp political polarisation that contributes to the ongoing erosion of citizens’ trust in the two major political parties, is also facing an increasingly firm Russian grip over Abkhazia and South Ossetia.

Principled EU engagement that factors in both Russia’s influence and domestic developments

In light of these complexities, the challenge for the EU is to factor in both Russia’s influence and domestic developments into EU policy-making. The EU should seek engagement with all six countries, but it should do so guided by its own principles rather than merely for the sake of counterbalancing Russia’s clout. This entails resisting pressure from both Russia and the partner countries themselves. In the context of open rivalry between two external powers, domestic elites in the pursuit their own interests may be tempted to play off the EU and Russia against each other. Therefore, vis-à-vis EAEU countries (primarily Armenia) and Azerbaijan, the EU should expand  engagement with non-governmental actors. Civil society and small and medium-sized businesses can act as drivers of change and promote closer ties with Europe. With time, this could contribute both to balancing Russia’s overwhelming influence and/or to loosening domestic regimes’ grip on civil society. Vis-à-vis the three associated countries, the EU should both step up and broaden its support for AA/DCFTA implementation, while also closely monitoring domestic developments and regional pressures.

In light of the situation in eastern Ukraine and breaches to rule-based integration within the EAEU, a bloc-to-bloc dialogue between the EU and the EAEU hardly seems feasible at present.  Nevertheless, there is room for at least some flexibility regarding engagement at the country level. Such  engagement is needed in order to factor in multiple external influences, and prevent the emergence of dividing lines between the different countries of the ‘contested neighbourhood’.

About the author: Laure Delcour is a Senior Research Fellow at The French Institute for International and Strategic Affairs (IRIS). She is also Scientific coordinator for the EU-FP7 project ‘Exploring the Security–Democracy Nexus in the Caucasus.’

The opinions expressed in this blog contribution are entirely those of the author and do not represent the positions of the Dahrendorf Forum or any of its hosts Hertie School of Governance, London School of Economics and Political Science and Stiftung Mercator.

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