Eurasian Union

Early last month, in the newspaper Izvestia, Russian Prime Minister Vladimir Putin announced plans to form a Eurasian Union, a close political and economic partnership between Russia, Belarus, and Kazakhstan. Ostensibly, this union would build on the existing, but clearly expanding, close ties between the three countries. Already, there is a customs union, which was established in 2009, and a "United Economic Space" that will be launched in 2012. 

The idea of a Eurasian Union has piqued the interest of other countries. Tajikistan reportedly expressed interest in it and its government is exploring its prospects. And Kyrgyzstan’s outgoing president President Roza Otunbayeva recently said the country would likely join the custom's union and might even join the proposed Eurasian Union. Kyrgyzstan sees security and economic benefits from even tighter ties to Russia. But at the same time, perhaps this proposed arrangement is just a natural progression from current economic relations with Russia and its neighbors. After all, according to Otunbayeva, "The natural flow of the work force, services and movement of capital is of course all directed to Russia and Kazakhstan."

Initially, publications like the Financial Times described Putin's plans as a challenge, perhaps a more appealing option, to the struggling European Union. But on a closer examination, while it's clear that Putin has modeled the Eurasian Union after Europe's EU, he probably has China on his mind. Indeed, he and other Russian politicians are justifiably concerned about the competition for power and influence in and near its neighborhood. After all, both Russia and China "have extensive Central Asian borders, and have strong interests, with China seeking energy suppliers and control over potential bases for militants from the Muslim region of Xinjiang." Add to this the fear that China's growing wealth and expanding energy needs make Beijing a good match for Russia's neighbors now and over the long haul. So with that in mind, "Putin likely hopes, by offering market access and political support now, Russia can get these countries 'locked in' to a deal that will make him the gatekeeper for China’s energy projects and political dealings in Central Asia. An economic or even currency union with Russia at its core would guarantee his continued relevance in an Asia that now looks like to be dominated by China in the coming century."

Is Putin serious about creating a Eurasian Union? Maybe, maybe not. But even if he is, this project is likely more aspirational than operational, at least for now. Why? I'm not sure that Russia has the political will to construct a Eurasian Union. For example, does Russia really want to create the perception that it's reforming the old Soviet Union? In the end, Moscow might decide that it would possibly create more suspicions and tensions that it would be worth. And after tasting independence for about the last 20 years, prospective Eurasian Union members might balk at the notion of restricting their autonomy and subverting their will to their Russian big brother. They might want to retain the freedom of choice and action, including doing deals with China.

All of that said, we must not forget that Belarus and Kazakhstan are weak and poor countries dependent on Russia for a variety of things. Would they consider it worthwhile to form stronger bonds with China at the expense of a good relationship with Russia? Probably not. Even if they believe China is the wave of the future, likely establishing dominance in the area, Belarus and Kazakhstan know that China probably won't be as nearly solicitous to their needs as Russia has been.

Arguably, the most damaging stumbling block would be the huge economic disparities between Russia on the one hand and Belarus and Kazakhstan on the other. Yes, tighter linkages gives Russia more influence over them; but meantime, they would also make Russia a significant stakeholder in their welfare, responsible for their political and economic and security ups and downs in ways far beyond it already is. This isn't necessarily a good thing. Indeed, this very possibility could doom the project to even more trouble than the EU faces today. Think about it. At this moment, the EU is wracked by the dilemma in which the stable, more prosperous countries, like Germany and France, have to bail out their poorer, less economically efficient EU brothers and sisters, like Greece and Italy and Spain and Portugal, just to ensure that the current economic problems don't cascade any further. As expected, this has caused frustration in France and Germany, is unsustainable over the long-term, and has led commentators to speculate about the fate, and possibly the demise, of the Euro and the EU as viable entity.

Let's apply this logic to a Eurasian Union. What happens if the economies of Belarus and Kazakhstan hit rock bottom? How does Russia respond? Does Russia bail them out, propping up their economies? If so, for how long? Keep in mind Russia doesn't have the economic wherewithal to do this forever. So what happens if Russia can't stabilize these countries somewhat quickly? Does Russia opt to divest itself of the problem, thereby pulling the rug on the Eurasian Union? Certainly, this is all conjecture, but it also suggests that Putin's Eurasian Union begs more questions than offers answers at this point.

Now, whether or not this project actually goes forward and moves into a real coordination and implementation phase, the mere suggestion of a Eurasian Union is revealing, on a few different counts. Let's look at three factors that appear to drive Putin's new project.

1. A few weeks ago, I wrote

A Eurasian Union is representative of Russian external balancing against China. It can allow Russia to pool its economic power with the other two member countries. It can extend and deepen Russia's influence into areas near China. Indeed, the borders of a Eurasian Union "will encompass much of China’s northwest and give Russia power over China’s access to Central Asian markets and energy supplies." And surely, close cooperation on economic and political issues can spillover into even tighter, more cohesive cooperation on military and security affairs, potentially producing a full-fledged military alliance. What does this mean? A Eurasian Union can reduce China's freedom of choice and action. It can block China's encroachment into Russia's turf, limit the spread of its influence, and hamper its power projection capabilities.

2. Right after the fall of the Soviet Union and the end of the cold war, political leaders in Moscow, including Washington's so-called friend Boris Yeltsin, issued critical remarks about America's world dominance. At that point, Russia no longer drove the pace and direction world politics, and its leaders were well aware of this. Russia was a declawed, fallen power, relegated to the sidelines, while the U.S. consolidated its grip on world hegemony. There was real remorse about this reality, and the Russians wanted to reclaim their day in the sun.

Putin's project is just the latest expression of these sentiments. Russia still wants to be recognized as a great power, still wants the attendant status and prestige of such a ranking. The only difference now is that Russia has realized the limitations of its power. Put simply, Putin knows Russia can't achieve great power status on its own, though its own individual actions and efforts, so he has decided to merge Russia's power with Belarus and Kazakhstan with the hope of getting there. Just look at his comments. As one example, according to Putin: "We suggest creating a powerful supra-national union capable of becoming a pole in the modern world, and at the same time an effective bridge between Europe and the dynamic Asia-Pacific Region."

3. We should also not rule out the role that domestic politics is playing in Putin's calculations. Specifically, he's likely trying to find ways to boost his and his inner circle's approval ratings. Consider the following. Elections to the Russian Duma will be held in December and presidential elections are slated for March 2012. Russian President Demitry Medvedev has stated his intention not to run to for reelection and proposed Putin as a candidate in the 2012 election. (Putin's candidacy reportedly will be made official later this month.) The election normally wouldn't be a major issue for Putin, but the ground is shifting a bit in Russia. "[Putin] is in a very difficult situation because the popularity ratings [of the authorities] are on a downward turn, and the same goes for his own personal rating...He needed to find a card to play that would engage the electorate."

In a country in which nationalism runs high, and there is a sense of longing for the past, it makes sense to tap into "society's nostalgia for the Soviet Union," which is what the idea of the Eurasian Union does. It recalls a time when Russia was strong and powerful, a major mover and shaker in world politics. While many Russians were impoverished and repressed during the cold war, at least they could be proud of their country's geostrategic importance. Now, they're just poor and lack freedom, at least that's the perception among many Russians today.

In this sense, Putin is smart. He may legitimately have an authoritarian personality and at times support what we think of as retrogressive policies. But he also knows what Russians want to see and hear. Internally, he positions himself as a law and order guy; and vis-a-vis foreign countries, he gives the impression that he's willing to stand up to bullies and aggressors. Additionally, we shouldn't be surprised when Putin performs all sorts of macho, tough guy acts for public consumption, like parading around shirtless, going deep sea diving, riding horses, climbing trees, and engaging in combat with a tiger, among other things. This is good politics. Putin realizes that Russians eat all of this up. In my view, we can see the Eurasian Union through this same lens. He knows that the idea of it will likely play well domestically, which is good for him politically.