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Can the Eurasian Economic Union be a Part of a New Constructive EU-Russia Settlement?

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 the last post of the series, Dr. Rilka Dragneva-Lewers discusses “normalising” relations with Russia.

In 2015, a number of initiatives on cooperation between the European Union (EU) and the Eurasian Economic Union (EEU) were publicised. They were seen by some policy-makers and experts in the EU as a potential aid to ‘normalising’ relations with Russia, while helping secure peace in Ukraine, yet the feasibility and potential of such cooperation remains in question.

The Russian/Eurasian perspective

While the blame for rejecting EU-EEU cooperation is often levied at the EU, Russia’s position in this matter – beyond general statements – has not been particularly clear or constructive. To start with, there are mixed signals as to what Russia wants from such cooperation. References to an inter-bloc free trade agreement have been made, and there has also been talk of upgrading the ’common spaces’ framework developed between the EU and Russia to the level of the EEU. Others have called more vaguely for ‘recognising’ the EEU and establishing ‘direct contacts’ between the two unions, without any further detail.  At the same time, it is increasingly clear that for Russia, inter-bloc cooperation – as well as integration as such – is not necessarily about free trade. The limits to its willingness to liberalise trade have been demonstrated in the context of its WTO accession and the trilateral talks on the EU-Ukraine DCFTA, but also in the very development of the EEU. The EEU remains (and in fact is becoming ever more) a very limited free trade area and a partial customs union, with a variety of exemptions and proliferation of trade barriers.

As asserted by the Russian leadership, what matters is the recognition of the Eurasian structures as an equal partner to the EU. Such a partnership, it has been argued, cannot be on the EU’s terms (actual or perceived), and should respect the differences between the two partners and their interests. In this context, the problems around Ukraine have reflected Russia’s perception of its legitimate interests in the region, which the EU is asked to accept as a matter of right. Indeed, the Russian government has sought to decouple EEU-EU cooperation from the Ukraine crisis. For example, Putin’s Press Secretary Peskov recently noted that conditioning relations with the EEU on the implementation of the Minsk agreements is ‘hardly relevant and hardly possible’. Arguably, for the Kremlin, the slate should be cleared for a new relationship in which pragmatic interests prevail over values or identities questioned by Russia.

It is clear that for Russia, region-building has been highly important in terms of global ambition, but has also been perceived in zero-sum terms. More recently, Moscow has been concerned about the Trans-Pacific Partnership and its accompanying agreements, perceived as the United States’ new approach to the division of world power with the EU ‘in its pocket’. It remains to be seen how these calculations will affect Russia’s views on EU-EEU cooperation. Moscow has certainly explored a new ‘pivot to Asia’, including synergies between China’s ‘One Belt One Road’ initiative and the EEU, as well as considering a ‘economic continental partnership agreement’ between the EEU and the Shanghai Cooperation Organization. Indeed, some Russian commentators have argued that any ‘Lisbon to Vladivostok’ plans must now take into account China’s new Silk Road.

It is also noteworthy that members of Russia’s elite have – rhetorically or not – pointed to the EU’s uncertain future (and possible demise) as another variable in deciding on future cooperation. Consequently, it has been argued that it might be better for the EEU to develop relations with Berlin and Paris, not Brussels. At the same time, the Kremlin’s continued interest in the EEU cannot necessarily be presumed. Over the last 25 years, Moscow has demonstrated a strong propensity toward using a variety of regional structures, easily shifting between them. Regional organisations have had high instrumental values for the Kremlin. Indeed, there has been recent mention of turning the Collective Securities Treaty Organisation into a universal organisation, i.e. one also capable of assuming economic functions. Undeniably, a lot more institutional and political investment has been made in the EEU relative to its predecessors, yet keeping the EEU together has high economic costs for Russia. It is also telling that core measures to strengthen the inner effectiveness of the organisation, e.g. adopting a new Customs Code, have taken back seats relative to more outward-oriented, geopolitical priorities, including ‘widening’ of the EEU and cooperation with partners, such as Vietnam, India, Syria and Hong Kong.

Finally, as has been clearly shown over the last year, what Russia wants is not necessarily what other members such as Kazakhstan and Belarus want. While cooperation between the EEU and EU is broadly supported by all, there are clear differences in the scope of parallel bilateral relations pursued with the EU, the nature of their WTO commitments, or indeed, their core vision as to what the EEU ought to be. Certainly, Russia’s partners have sought to revive their multi-vector policies. It is noteworthy that President Nazarbayev’s speech at Kazakhstan’s accession to the WTO failed to mention the EEU even once.

The options for the EU

The EU has so far failed to develop a clear policy on the EEU. In matters of trade, the EU has been reluctant to establish relations with the Eurasian Customs Union and its successor, the EEU. Apart from the lack of WTO membership of one of the EEU’s members, Belarus, there have been concerns about the institutional strength and economic relevance of the EEU, as well as its primary instrumental and geopolitical value to Russia. Many of the problems of Eurasian integration identified previously have only worsened. The image of the EEU as a WTO-compliant economic integration project, based on a clear division of institutional powers and predictable rules, is yet to materialise.

To the extent that relations have been considered, this has been in a foreign policy context – as an aide to securing peace in Ukraine and ‘normalising’ relations with Russia. The recent declaration of the EU Foreign Affairs Council makes any future developments subject to the implementation of the Minsk agreements. Agreement on this precondition is welcome, yet its realisation remains highly uncertain.

On balance, it can be argued that no ‘grand treaty’ between the EU and the EEU can realistically be expected. At the same time, it is questionable whether the EU should have no formal relations with the EEU at all. Regardless of its geopolitical underpinnings, the EEU has a commercial reality: EU businesses cross EEU customs borders and interact with EEU rules and institutions as well as Russian ones. Relations continue to be governed by an outdated framework, with disputes on ‘trade irritants’ destined for the WTO, which can be a slow and complicated process. While bilateral relations with the EEU member states need to be developed, and their interests should not be marginalised, it will be beneficial to maintain a certain minimum level of relations with the EEU. Such relations, it can be argued, should begin with small and selective actions and be flexible and gradual. It is essential that the EU (and its member states) invests in a better understanding of Eurasian integration processes (within the EEU as well as within the region more generally) and formulates with greater clarity the potential costs and benefits of its options for cooperation, including the necessary preconditions for economic relations to progress.


About the author
Rilka Dragneva-Lewers is a Reader in Law, Development and Regional Integration at the University of Birmingham.

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