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The Eurasian Economic Union: Power, Politics and Trade
The Eurasian Economic Union: Power, Politics and Trade
Table of Contents
  1. Executive Summary
Islamic State Threatens Central Asia
Islamic State Threatens Central Asia
Kyrgyzstan's President Atambayev, Russia's President Putin, Kazakhstan's President Nazarbayev, Belarus' President Lukashenko and Armenian's President Sargsyan stand for a photograph before a meeting of the Eurasian Economic Union in Astana, 29 May 2014. REUTERS/Mikhail Klimentyev/RIA Novosti/Kremlin
Report 240 / Europe & Central Asia

The Eurasian Economic Union: Power, Politics and Trade

Since its creation in 2015, the Eurasian Economic Union (EEU) has kept only a few of its promises. Its limited economic success cannot mask the many tensions between Russia and its neighbours. Much of the EEU’s future success will depend on its members’ will to shift away from geopolitics a​nd focus on international cooperation, governance, social welfare and migration.

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Executive Summary

The Eurasian Economic Union (EEU), created in 2015 by Russia, Kazakhstan, Kyrgyz­stan, Belarus and Armenia, claims to be the first successful post-Soviet initiative to overcome trade barriers and promote integration in a fragmented, under-developed region. Supporters argue that it could be a mechanism for dialogue with the European Union (EU) and other international partners. Critics portray a destabilising project that increases Russia’s domination of the region and limits its other members’ relations with the West. The EU views the project as a challenge to sovereign choices in its Eastern neighbourhood. Positions hardened after Armenia’s 2013 departure from the Association Agreement with the EU, including the Deep and Comprehensive Free Trade area, and Russia’s annexation of Crimea.

On paper, the EEU is an economic, technocratic project that offers some benefits to members, particularly in easing cross-border trade and facilitating labour migration, but also poses economic risks by raising external tariffs and potentially orienting economies away from global markets. So far it has had little economic success, though access to Russia’s labour market has been an important motivator and, on balance, a positive outcome for struggling post-Soviet economies. Beset by trade disputes, sanctions regimes and a regional economic crisis, trade inside the EEU fell by 26 per cent in 2015. But optimists argue that the legal status of labour migrants within the bloc has improved, and there will be long-term gains from harmonising customs and trade rules.

The main political tensions around the EEU, however, stem from its role in regional politics. Russia views it not only as an economic grouping, but also as a mechanism to institutionalise influence over its neighbours and as a building block in a new international order. This raises tensions with members and has led to a clash with other integration drivers in the EU’s and Russia’s shared neighbourhood, specifically the EU’s Association Agreements, including a Deep and Comprehensive Free Trade area (AA/DCFTA). Moscow views these EU initiatives as encroachment into its sphere of influence. This clash between different regional projects contributed to the tensions and conflict in Ukraine in 2014, and while Moscow argued the AA/DCFTA was harmful for its economy, EU officials saw the concern as political, stressing that EU standards are not a burden even for EU companies when exporting to Russia or cooperating with Russian companies. Both sides view the other as a rival, but EEU member states other than Russia have sought to deepen their relationships with the EU where they can.

Closer economic integration within the EEU should make conflicts between members (for instance, between Russia and Kazakhstan) less likely. Easier cross-border trade and movement could reduce tensions in Central Asia. Yet, if Russia uses the EEU to dominate the region politically and as a platform for confrontation with the West, other members are likely to view the organisation as a threat to their independence. Rival economic partnerships – whether with the EU or China – would then look more attractive, potentially creating tensions in relations between EEU members and Moscow.

The EEU’s uncertain role and future and the standoff with Russia over Crimea and eastern Ukraine, make it difficult for the EU to develop a coherent policy toward it. Some Brussels officials and member states are opposed to any talks, fearing they would legitimise Russia’s policies toward its neighbours and cut across bilateral relations between the EU and Armenia, Kazakhstan, Kyrgyzstan and Belarus – all of which have experienced new momentum in the past year and a half. Others argue that EU engagement with the EEU is a possible channel for a breakthrough in relations with Russia, or at least that it could help build bridges, or even take pressure off countries in the Eastern neighbourhood and Central Asia, some of whom have complained about being trapped between Moscow and Brussels.

Political engagement between the two blocs is hardly realistic at present, in particular until conditions such as implementation of the Minsk Agreement on the Ukraine conflict are met. While Moscow has repeatedly expressed an interest in formalising relations, many in the EU have concerns that such a step would produce a substantively empty process with an appearance of normal relations but minimal substantive gains.

If approached with full awareness of the above risks, low-level technical talks between EU and EEU officials could, however, help inform future strategies and offer some pragmatic short-term gains, at least in terms of defining substance for future discussions.

Higher-level engagement, however, should only follow serious shifts in Russian policy, both in Ukraine and in relation to other regional states, and this is highly unlikely in the short-to-medium term. The EU would also have to consider whether recognition of the EEU would enhance or undermine the ability of smaller EEU member states to define their bilateral relationship with Brussels.

Moscow/Astana/Bishkek/Dushanbe/Brussels, 20 July 2016

Tajikistan commander Gulmurod Khalimov, chief of Tajikistan’s paramilitary police unit (OMON), appeared on an ISIS propaganda video released on 27 May 2015.

Islamic State Threatens Central Asia

The appearance of Colonel Gulmurod Khalimov in an Islamic State (IS) propaganda video on 27 May has sent a chill across Central Asia. The head of Tajikistan’s Special Assignment Police Unit (OMON), a key element in President Emomali Rahmon’s security apparatus, had disappeared shortly before. In the video he promised to return to wage violent jihad.

A trained-in-Russia-and-America veteran of brutal Tajik government operations, Khalimov has the qualifications. And Tajikistan, a desperately poor country ruled by a venal elite, is a vulnerable target. As I drove to its capital, Dushanbe, last summer through the ancient city of Khujand and the rickety, fume-filled, Iranian-built Shariston tunnel, I saw poverty and isolation that eclipses the worst pockets of deprivation in neighbouring Kyrgyzstan and Kazakhstan.

Khalimov has been an intimate of that elite, but at 40 years old he is relatively young and forceful, unlike the elderly, usually corrupt figures who have previously promoted themselves as Islamist guerrilla leaders in Tajikistan. His defection is a blow to Rahmon’s regime on many levels. He speaks to the parts of the elite not yet bought off and to the alienation of a substantial segment of society.

His message may be draped in Islamic fundamentalist rhetoric, but it is based on some of the potent, more worldly aspects of IS appeal. “Going out to work every morning, look at yourself in the mirror and ask yourself: Are you ready to die for this state or not”, he said directly to the underpaid, overstretched Tajik security forces. “I am ready to die for the Caliphate – are you?”

More than one million Tajik migrants work low-paid jobs in Russia. The remittances they send back make up more than 40 per cent of its GDP. But the value of the remittances is plummeting as Russia veers toward economic crisis. Nearly 200,000 of the migrants went home to bleak prospects in the second half of 2014 alone.

To Tajiks still in Russia, the police commander’s message was “you have become the slaves of non-believers. Why do you humiliate yourself working for non-believers while they must work for you? Join us, brothers … there are no nationalities or states in the Islamic State and our nationality is Islam”.

The eight million people of Tajikistan have known much violence already in their quarter-century of independence since the Soviet Union’s collapse. Rahmon, the only president the country has had, consolidated his power in a civil war against Islamists that ended in 1997. By side-lining the relatively moderate Islamic Renaissance Party earlier this year, he further alienated the devout and gave plausibility to those who argue that with other options closed, extremism is only the politics of last resort.

IS and other foreign fighters, probably the Islamic Movement of Uzbekistan, are already operating on Tajikistan’s southern border, but that is not the only fault line. Gorno-Badakhshan, high in the Pamirs – a twelve- to fifteen-hour drive when roads are passable – is inhabited by ethnically distinct Pamiris, who were with the rebels in the civil war and barely accept central power today.

Badakhshan has a long, open border with Afghanistan to the south, Kyrgyzstan to the north and China to the east. The Taliban are already active on the immediate Afghan side of that border. It may only be a matter of time before IS is there too.

The Tajik-Afghan border already attracts Russian attention. Even two years ago, an official of the Moscow-led Collective Security Treaty Organisation (CSTO) of a half-dozen ex-Soviet republics told me it was uncontrollable and deadly. This year a Russian diplomat said privately that if the Tajik government requested it, Russia would return troops to it.

The apprehension does not stop there. Neighbouring Uzbekistan – Central Asia’s most populated and most authoritarian state – and chaotic, coup-prone Kyrgyzstan, would be deeply troubled by serious unrest in Tajikistan.

International Crisis Group has been in Central Asia for fifteen years, arguing that the West, particularly the U.S., is building a dangerous debit sheet here. To gain logistical help for war in Afghanistan, it has partnered with dictators like Rahmon and Uzbekistan’s Karimov, accepting excesses excused as counter-terrorism, including repression of peaceful Islamic manifestations.

If other security figures follow Khalimov’s lead, the bill to pay could be steep, and there will not be credit left to pay it with.