International Forecaster Weekly

Another Headache for Moscow

For all the hoopla, you might have thought this was going to be something historic. But in retrospect, all the swollen, self-important talk about the Eurasian Union seems horribly out of step with the reality of what has been birthed here.

James Corbett | January 10, 2015

One thing is for certain: this is not the way that Putin planned to introduce the Eurasian Economic Union to the world. It's not just that the launch itself was quickly overshadowed by events in Paris this week, although they certainly were. It's that he probably wished it had never been launched at all, or at least not under these circumstances.


            The Eurasian Economic Union is Moscow's answer to the EU. It represents a single, integrated market between Russia, Belarus, Kazakhstan and Armenia, with Kyrgyzstan in the process of accession. The origins of the EEU can be traced back to the Customs Union agreements and integration treaties inked by Russia, Kyrgyzstan, Kazakhstan, Tajikistan and Belarus back in the 1990s after the fall of the Soviet Union. This morphed into the Eurasian Economic Community in 2000 and eventually became a Customs Union in 2010 and Common Economic Space in 2012 before emerging as the Eurasian Economic Union on January 1st of this year.

            The fruition of this decades-long quest for Central Asian economic integration was supposed to arrive with fanfare. For the last several years, Russian President Putin has been celebrating the EEU as one of the columns supporting his own vision of a New World Order. “This project is, without exaggeration, a historic milestone for all three countries and for the broader post-Soviet space,” Putin wrote about the Common Economic Space back in 2012, adding “I am convinced that the establishment of the Eurasian Union and efficient integration are approaches that will enable members to take a prominent place in our complicated, 21st century world.” He goes on to stress that the EEU is based on “WTO principles” as if this is a point in the plan's favor. In 2010, Putin even dared to dream that this supranational institution would one day stretch “from Lisbon to Vladivostok.”

            This type of rhetoric was seized upon by the usual hawks and warmongers in the US State Department to warn of the rise of a new Soviet era. In 2012, Hillary Clinton denounced the plan as “a move to re-Sovietise the region” adding “It’s not going to be called that. It’s going to be called a customs union, it will be called Eurasian Union and all of that. But let's make no mistake about it. We know what the goal is and we are trying to figure out effective ways to slow down or prevent it.”

            For all the hoopla, you might have thought this was going to be something historic. But in retrospect, all the swollen, self-important talk about the Eurasian Union seems horribly out of step with the reality of what has been birthed here. Even the Union's member states seem to want to downplay its scope and influence;.Kazakhstan lobbied hard to get the word “economic” added to the title, so it is officially the Eurasian Economic Union (EEU). And both Kazakhstan and Belarus have negotiated “sweeteners” for the deal in the form of gas deals or outright cash from Moscow in return for their participation. Nations like Kazakhstan are more in the economic orbit of China these days through the New Silk Road project of Xi Jinping, which is not a party to the EEU and in some ways has directly competitive aims to the Union. Perhaps even more of an insult, Uzbekistan is holding out on joining the Union and the Kyrgyz President outright snubbed it last December, saying “Ukraine has a choice, but unfortunately we don’t have much of an alternative.”

            Meanwhile, the Customs Union that the EEU is predicated on has had no net economic benefit for any of the participants except Belarus and the addition of even smaller economies like Armenia and Kyrgyzstan and (potentially) Tajikistan make it less of a potential economic (or geopolitical) juggernaut and more of an EU-like yoking of a large, robust economy to peripheral, tenuous economies. Furthermore, the 'free circulation of goods, services and assets' supposedly guaranteed by the Union doesn't include the most important commodity in the mix, oil and gas, and Moscow has banned imports of Belarusian meat and dairy products because they might contain EU ingredients, a violation of Russia's counter-sanctions on the west.

            Any way you slice it, the EEU is just not what Putin (or Clinton or anyone else) believed it would be. And this is a good thing.

            The similarities between the EEU and the EU are not just superficial or coincidental; they are there by design as the EEU was consciously modeled on the European Union.

            Just like the EU, the Eurasian Union started with the creation of a common market. Putin even bragged that “It took Europe 40 years to move from the European Coal and Steel Community to the full European Union. The establishment of the Customs Union and the Common Economic Space is proceeding at a much faster pace because we could draw on the experience of the EU and other regional associations.”

            Just like the EU, the EEU is quickly transitioning from early promises that this is “just” an economic union into talk of full-scale economic and governmental integration. Last year Igor Shuvalov, Russia's First Deputy Prime Minister, stated that there would be a common currency unit in the Union within the next five to ten years and the Director of Financial Policy for the Eurasian Economic Commission mused about “a transition to a single currency for the union.”

            Just like the EU, it has a commission (the “Eurasian Economic Commission” based in Moscow) that acts as a “Permanent supranational regulatory body of the Customs Union and Single Economic Space,” and a council (the “Supreme Eurasian Economic Council” headed by the member states' heads of state) which makes binding decisions that must be followed by all members.

            And just like the EU, the EEU represents a region that is descending into economic collapse as the institutional integration picks up steam. Russia's own economic problems are well-known by now, but they have spin-off effects on all of the members and potential members of the EEU. Belarus has imposed price freezes to stop a run on foreign currency. The Armenian dram has been devalued, causing a debt crisis for farmers already struck by a poor harvest. Potential economic migrants to Russia from Central Asia are thinking twice about relocating now that the ruble is plummeting and exports to Russia from various countries are declining along with the country's economic prospects.

            In the end, it seems that Moscow has spearheaded an attempt to build a European Union counterpart and are now paying the price by having it look altogether too much like the European Union: a feckless, disastrous yoking of economies that are already struggling.

            Of course, this should not be surprising to observers of the European Union who realize that it is the very process of artificially wedding vastly different economies in a shotgun marriage of convenience to satisfy a political agenda of globalization. And make no mistake, the EEU is every bit as much of a globalist Trojan horse as its EU forerunner is. Throughout the past year the European Economic Commission has been playing up the idea that the EEU will eventually transition into a single currency (the “altyn”) controlled by a single Central Bank by 2025. Interested EEU member citizens should ask some EU citizens how well Draghi and his ECB cohorts are working out for the EU citizens.

            Sadly, also like the EU, the inevitable failure of the EEU to deliver prosperity (let alone freedom or self-determination) to its member citizens does not actually undermine the globalist ideology that underlies it. In an insidious way, it bolsters it. As we've talked about a number of times before in these pages, the engineering of economic failure and collapse is necessary in the long term for these various regional unions and bodies to be united under a professed need for global coordination. As always, the only way out is for the citizens of the EEU member nations to strongly, unequivocally and in no uncertain terms reject their countries' participation in the Union.

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