{"id":84965,"date":"2024-05-13T15:34:13","date_gmt":"2024-05-13T12:34:13","guid":{"rendered":"https:\/\/pozirk.online\/en\/longreads\/84965\/"},"modified":"2024-05-13T15:34:16","modified_gmt":"2024-05-13T12:34:16","slug":"minsk-disappointed-with-eaeu-moscow-unwilling-to-fund-it","status":"publish","type":"longreads","link":"https:\/\/pozirk.online\/en\/longreads\/84965\/","title":{"rendered":"Minsk disappointed with EAEU, Moscow unwilling to fund it"},"content":{"rendered":"\n

Moscow hosted a summit of the Eurasian Economic Union (EAEU)<\/strong> on May 8. Ten years after its launch, the Moscow-led alliance faces major challenges.<\/strong><\/p>\n\n\n\n

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\n (freepik.com)<\/span>\n <\/div>\n <\/figcaption>\n<\/figure>\n\n\n\n

Different sizes, types of economies<\/strong><\/h2>\n\n\n\n

The EAEU states have failed to forge strong economic ties. In 2023, mutual trade accounted for just 18 percent of the EAEU countries\u2019 total trade. The share of mutual trade is much higher in other regional alliances, for example 40 percent in NAFTA and 65 percent in the European Union.

As a rule, countries with loose economic ties do not form economic alliances. For most EAEU countries, membership is a demonstration of political loyalty to Russia.

The member states are very different in size, with Russia being dominant. As a result, the EAEU success depends largely on Russia.

The member states have diverse economies. Russia and Kazakhstan are oil and gas producers, while others are energy consumers. The energy-importing countries are interested in having a single market for gas, oil and petroleum products as soon as possible, while Belarus would like to buy energy at Russia\u2019s domestic prices.

The oil-rich countries, primarily Russia, would like to delay single market launch as long as possible. It has been postponed until 2025, and likely to be further delayed.

Kazakhstan and Kyrgyzstan are market economies, while Belarus is not.<\/p>\n\n\n\n

Most EAEU products are not competitive elsewhere. The governments introduce protective measures against foreign competitors, import substitution programs and other barriers.<\/p>\n\n\n\n

The EAEU tends to isolate itself from the outside world and has limited access to state-of-the-art technologies.<\/p>\n\n\n\n

For Kremlin, it is all about geopolitics<\/strong><\/h2>\n\n\n\n

Russia is the key driver of Eurasian integration. It sees the EAEU as a geopolitical bloc rather than an economic alliance.

Russia is trying to expand its influence and rally other post-Soviet countries. Russian President Vladimir Putin bills himself a land gatherer, and the EAEU was created to serve this purpose.<\/p>\n\n\n\n

Therefore, for political reasons, Moscow has been pushing for unification in every possible way.<\/p>\n\n\n\n

During the discussion of a customs union in the 1990s, all controversial issues were put aside, postponed or discussed at the bilateral level. In other words, disagreements were put off and therefore preprogrammed into the matrix.

The member states formally launched the customs union in 1999, but have failed to establish a proper customs union to date with countries still applying different rates to many goods.

Despite the failure, Putin encouraged the allies to move over to the second level of integration by establishing a common economic area with free, unrestricted movement of capital, goods, services and labor.

The member states failed to do it as well, despite signing an agreement to that effect in 2000. There is no common market, and there are still many restrictions and barriers to trade. Talks on a common market for gas, oil and petroleum products have stalled.

Although work on the common economic area has not been completed, the member countries, on Russia’s initiative, announced the third stage, an economic union, in 2014.<\/p>\n\n\n\n

Eurasian Economic Union does not live up to expectations<\/strong><\/h2>\n\n\n\n

The economic union is a higher form of integration. It provides for uniform macroeconomic policies, such as budget deficit, inflation and subsidy limits and an exchange rate mechanism.

The European Union, for instance, transferred decision-making to supranational agencies.

The EAEU, however, has a problem. Most countries are ruled by authoritarian leaders who do not want to share power in principle. They are reluctant to delegate powers to supranational agencies.

The Belarusian government refuses to give up control over the exchange rate, inflation and subsidies.

In most EAEU member states, the country’s leaders have huge powers in decision-making. Much depends on their personal position rather than government institutions.<\/p>\n\n\n\n

If leaders change, policies can change significantly. This is also a risk to be taken seriously.<\/p>\n\n\n\n

Russia overestimates its power<\/strong><\/h2>\n\n\n\n

Russia is the driver of Eurasian integration, while all others joined with the only purpose to receive benefits from Moscow, in particular cheap energy and access to the Russian market.

It turned out, however, that Russia had somewhat miscalculated its power. When it launched the EAEU, Moscow did not estimate its cost. Russia is supposed to pay for it if it wants to be an empire.

The EAEU turned out to be a heavy and economically unsustainable burden for the Kremlin.

Russia spends heavily on the war against Ukraine, and its ability to help its allies is shrinking. Since it cannot offer any new incentives, EAEU members are looking for other sources of support.

The member states give priority to bilateral relations, while Russia is trying to build exclusive relations with each member state. For example, Moscow has a separate alliance with Belarus with the latter benefiting from generous subsidies, including cheap oil and natural gas.

Nevertheless, EAEU members are considering an expansion by inviting Asian countries, such as China, Iran, India, Mongolia and Vietnam, to join its free trade area.<\/p>\n\n\n\n

Putin\u2019s empire<\/strong><\/h2>\n\n\n\n

Russia’s war against Ukraine has given a new meaning to the EAEU.

Moscow has declared a crusade against the West. It is trying to strengthen old alliances, such as the EAEU, CSTO, CIS, SCO and BRICS, and set up new international organizations to oppose the “Anglo-Saxon world.\u201d

On the other hand, before attacking Ukraine in 2022, Putin said that he did not recognize the collapse of the USSR and the 1991 borders. He described the Soviet Union\u2019s disintegration as a geopolitical catastrophe.

The war against Ukraine proves that Putin’s idea of rebuilding the empire is not just wishful thinking, but a very real threat to other countries. Their leaders might think twice before accepting any Russian proposals to deepen integration or establish supranational agencies.<\/p>\n\n\n\n

Smuggling<\/strong><\/h2>\n\n\n\n

A lack of unity is the EAEU\u2019s inherent problem. Some member states impose economic sanctions on third countries, and others not.

Even before 2022, Russia imposed trade embargoes on the EU, Ukraine and Turkey. That was a source of tension between Russia and other members. For example, Moscow repeatedly accused Belarus of smuggling goods from these countries.

After the West imposed severe economic sanctions on Russia over Ukraine, companies have used EAEU member states as transit routes for smuggling sanctioned goods to and from Russia.<\/p>\n\n\n\n

Although the governments deny involvement, a sharp increase in trade in sanctioned goods proves gray imports. The risk of secondary sanctions from the United States does not stop smugglers.<\/p>\n\n\n\n

Also read: \u0141uka\u0161enka rules out unification with Russia, pro-Russian speakers fall out favor<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Moscow hosted a summit of the Eurasian Economic Union (EAEU) on May 8. Ten years after its launch, the Moscow-led alliance faces major challenges. Different sizes, types of economies The EAEU states have failed to forge strong economic ties. In 2023, mutual trade accounted for just 18 percent of the EAEU countries\u2019 total trade. The […]<\/p>\n","protected":false},"author":20,"featured_media":57828,"template":"","rubric":[24],"class_list":["post-84965","longreads","type-longreads","status-publish","has-post-thumbnail","hentry","rubric-theviewer"],"acf":[],"yoast_head":"\nMinsk disappointed with EAEU, Moscow unwilling to fund it | Pozirk<\/title>\n<meta name=\"description\" content=\"Moscow hosted a summit of the Eurasian Economic Union (EAEU) on May 8. 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