Introduction

The Eurasian Economic Union (EAEU) was established in January 2015 and was aimed at creating a shared economic space with a single customs union and integrating states into a new cohesive economic entity. A more advanced iteration of the Eurasian Customs Union, founded in 2010 with Russia, Belarus, and Kazakhstan, the EAEU was established when Armenia and Kyrgyzstan joined on January 2, 2015 and August 6, 2015, respectively.

While the EAEU is the first such economic union in the post-Soviet space, countries outside the region, such as Iran and Mongolia, are also being courted to join.

While Russia’s primary aim of Eurasian integration has been to more effectively project its power globally, other member states have been less interested in pursuing deep integration. This is evident from the significant institutional deficiencies within the EAEU, most notably, the lack of common Eurasian Economic institutions which render the organization ineffective in the medium to long term.

Aims and Limitations

The EAEU has been touted by Eurasian leaders, including Russian President Vladimir Putin, as a counterpart to deep, European Union-style integration. Delegating competencies to common institutions, however, entails a significant renouncing of sovereignty by member states, as the union establishes an authority structure that is, nominally, supposed to supercede national structures. Efforts at ensuring accession of member states through ad hoc gestures of generosity such as lower energy prices, however, presents an obstacle to a genuine, rules-based union. Furthermore, as individual members have been less than enthusiastic about membership in the EAEU, Russia’s response of institutional flexibility and weak formal commitments has facilitated membership, but has also left the long-term durability of the union in doubt.

As a union, the EAEU comprises several governing bodies with equal representation of members. These are the Supreme Council – consisting of the heads of state, the Intergovernmental Council – consisting of heads of government, and a two-tier Eurasian Economic Commission. The upper body, the Eurasian Economic Commission (EEC) Council, includes deputy heads of government, and the lower body, the EEC Collegium, comprises ministers nominated by member states. All bodies make decisions by consensus, except the EEC Collegium, which adopts acts with a two-thirds majority.

The overall quality of governance across EAEU member states is low. In particular, EAEU member states are generally characterized by low standards of legal culture and a poor commitment to rule of law. Member states’ political elites are largely unaccustomed to political accountability, and little consideration is given to compliance within member states. Therefore, the task of creating supranational structures with better governance capacity than national institutions is a challenge (EBRD Transition Report, 2012).

The poor governance that characterizes EAEU states threatens the effective functioning of the union as a rules-based regime. Yet simultaneously, the EAEU abstains from promoting the rule of law in the way the EU does. The EAEU actually seeks to ensure that integration ‘respects the specificities of the political order of its member states’ (Treaty on the Eurasian Economic Union, 2014). While the current mode of decision-making offers a great deal of flexibility to member states to tailor their integration, the lack of formally binding provisions limits the scope of Eurasian integration.

Priorities of integration

The Union comprises a framework for integration that includes the creation of a common market without internal barriers. This entails the removal of non-tariff barriers and establishing common markets in energy, industry, and agriculture, as well as the harmonization of various domestic policies. Such an agenda arises from the acknowledgment that the benefits of preferential trade agreements emerge from deep integration. Such an ambition, however, requires strong domestic institutions and a high level of cooperation. In reality, this integration is hampered by the desire for flexibility by member states.

The EAEU treaty, signed in May 2014 by leaders of Russia, Belarus, and Kazakhstan, declares that member states can trade with one another without tariffs, non-tariff barriers or other internal customs controls. Things become more complicated, however, when it comes to border trade and the elimination of domestic regulatory and other non-tariff barriers to trade. While the provision of common border regulation was achieved through the adoption of a common customs code, that code resulted in complex customs regulations because of the references to national legislation – something that was heavily criticized by businesses (Dragneva and Wolczuk, 2017). A new code was adopted in December 2016 to resolve this. Non-tariff barriers, however, remain a significant obstacle to free trade in the EAEU.

Further integration is also hindered by new obstacles to free trade. Most well-known are the ‘trade wars’ (see The Moscow Times, 2015; Radio Free Europe/Radio Liberty, 2018) between EAEU member states. These disputes exhibited problems with regards to the invocation of exemptions to free trade based on allegations of food safety standard violations. These battles at the very least signify a lack of certainty in trade relations.

Members

The EAEU is a project steered by Russia to engage with post-Soviet countries and the benefits to Russia are more political than economic. Trade with EAEU member states, for example, accounted for only 5 percent of Russia’s overall trade (Dragneva and Wolczuk, 2017). Russia’s initial intentions were to establish a more comprehensive union that encompassed a unified monetary regime, as well as political and defense integration. This more extensive plan was rejected by other states – in particular Kazakhstan, which was able to limit the EAEU to economic integration (Dragneva and Wolczuk, 2017). While members had good reasons to join the EAEU, thus allowing the union to expand, the union arguably benefits Russia the most, allowing it to respond to the challenge of a powerful EU with a similar regional union in Eurasia. The EAEU also fulfils an implicit role as the Eurasian alternative to the EU – a framework for imposing on neighbor states a geopolitical choice between the West and Russia.

For Belarus, better access to the Russian market has been the greatest appeal of membership. Given Belarus’s dependence on imports from Russia, achieving favourable terms for energy imports has determined Belarus’s decision to seek closer cooperation with Russia. In particular, Belarus relies on Russia’s oil and gas.