_ Yuri Kofner, junior economist, MIWI. Munich, 15 March 2019. First published in the journal “New Eastern Europe”.
In May 2019 we will celebrate the fifth anniversary of the signing of the Treaty on the Eurasian Economic Union (EAEU) and the 25th anniversary of the idea of modern Eurasian integration. Since then, the Eurasian Economic Union established itself as a quite successfully developing, open and attractive integration block, which has indeed become the indisputable reality of the economic processes in Eurasia. Perhaps enough time has passed so that we might begin to think about a “theory of Eurasian integration” in itself, as well as to outline its potential contents.
Most importantly the Eurasian Economic Union, which was first proposed in 1994 not by Moscow but by Kazakhstan’s president Nursultan Nazarbayev, is still primarily intergovernmental in nature and has a declared purely economic agenda. According to the EAEU Treaty, its overall goal is to create an environment conducive to realising the potential of economic ties within the region, modernising national economies and increasing global competitiveness. The core of Eurasian integration is the single market for goods, services, capital and labour. For the first time in history the EAEU is a completely peaceful, voluntary, as well as an arguably democratic, equal and market-based unification of the countries and peoples of the Eurasian space.
Looking at these goals, the theory on modern Eurasian integration ought to be called “pragmatic Eurasianism”, since it follows a purely pragmatic approach to building integration. Completely pragmatic economic goal-setting, not ideological content, e.g. as opposed to the concept of federalism in integration theory, occupies the central position in the wording of the EAEU Treaty and the logic of building institutions of Eurasian integration.
Reunion because of crisis: Holding-together integration
To explain the logic of Eurasian integration, the sociologist from Ludwig Maximilian University Alexander Libman and the director of the Eurasian Development Bank’s Centre for Integration Studies Evgeny Vinokurov offer the theory of holding-together integration (2012). Holding-together integration is regional integration initiated by a group of countries that until recently were part of a unitary state or a colonial empire and maintain a high level of economic, political and cultural ties.
Firstly, holding-together integration helps maintain a certain level of economic and political cohesion between newly independent states – either indefinitely or for a limited period (thereby making the separation process less costly and painful).
Secondly, holding-together integration may also initiate a U-turn: strong disintegration after dissolution of the unitary state, followed by reintegration based on interstate cooperation, new principles, various mechanisms and possibly a revised set of members. During periods of economic prosperity countries can take symbolic steps to create a national identity, but an economic slump makes the costs of nation-building prohibitive. In general, holding-together regionalism may be an integration project necessitated by a crisis: an economic downturn may spur cooperation between countries. In an unfavourable economic situation, deep economic ties between newly independent states are more likely to be strengthened than these states’ links with third parties.
Take note that the Eurasian Economic Community (EurAsEc) was formally established in 2000, when Vladimir Putin came to power. However, the EurAsEc Customs Union, the all-so-important precursor of the EAEU, was established only in 2010, after a decade of high oil prices and confident GDP growth in Russia, Kazakhstan and Belarus came to an end. The leaders of these countries only really committed to Eurasian integration after the global economic crisis and the start of a period of political instability in the post-Soviet space – a phenomenon labelled as “colour revolutions” by the Kremlin.
Understanding Russia’s interest: Cooperative hegemony
From the point of view of the realistic approach, integration processes are rather difficult to explain, as the question arises as to what causes a major power, in our case Russia, to bind itself to an external institutional framework (the rules of the game) by participating in processes of regional integration with smaller states. To explain this phenomenon, the Danish political analyst from Aarhus University Thomas Pedersen in his article “Cooperative hegemony. Power, ideas and institutions in regional integration” (2002) offers the theory of cooperative hegemony, which goes beyond the analysis of the European experience.
Cooperative hegemony is a type of regional order within which soft control is exercised through cooperation agreements based on a long-term strategy. It is only one of four other possible strategies of the great powers, and the choice can also be made in favour of a one-sided hegemony, building an empire or a “concert”. Cooperative hegemony can be understood as a binding “contract” between the regional center, i.e. Russia, and the periphery, i.e. the other EAEU member states: the first agrees to some preferences and follows the policy of a certain self-restraint in exchange for the loyalty of the second.
My friend the state: Liberal intergovernmentalism
Liberal intergovernmentalism explains the nature of the EAEU very well. Having only recently gained independence from a highly centralised and unified state (the USSR), the newly independent states of the post-Soviet space highly cherish their sovereignty and national identity.
Like intergovernmentalism, liberal intergovernmentalism emphasises national governments as the key actors in the process of integration and considers supranational institutions to be of limited importance in the integration process. However it also incorporates the liberal model of preference formation, whereby national governments, such as the EAEU member states, have a strong idea of what their preferences are and pursue them in bargaining with other member states. Liberal intergovernmentalists argue that the bargaining power of member states is important in the pursuit of integration, and package deals and side payments also occur in the process of making deals. They see the multilateral institution as a means of creating credible commitments for participating governments, that is, as a way of making sure that the other governments with which they make deals will stick to their side of the bargain. In addition to that, especially the national governments of the smaller member states – Armenia and Kyrgyzstan – view the perks of Eurasian integration as a viable means to implement their social and economic commitments towards their populations.
Liberal intergovernmentalism is a development on the intergovernmental theory of European integration, established by the American professor at Princeton University Andrew Moravcsik in his book The Choice for Europe: Social Purpose and State Power from Messina to Maastricht (1998). During the 1990s it was the dominant theory of European integration.
According to law researchers from the Moscow-based Higher School of Economics Kirill Entin and Maksim Karliuk, in a narrow sense it is already fair to speak about the existence of an “acquis of the Eurasian Economic Union” in its own right. There could be some reservations or doubts regarding this statement as the field of the EAEU exclusive competence and the powers of the Eurasian Economic Commission (EEC) remain limited – mainly in trade with third parties, on technical regulation and on sanitary, phytosanitary and veterinary measures, anti-dumping and trans-border competition. Moreover, although the Commission’s decisions are directly applicable, the Commission often lacks the necessary instruments to ensure the EAEU countries’ compliance with their obligations at the national level. The EEC cannot impose sanctions for failure to fulfill obligations before the Court. This “integration handicap” creates an extensive field for violations, which in turn compromises integration.
Another handicap is the absence of the preliminary ruling procedure in the arsenal of the Court of the Eurasian Economic Union – an instrument that greatly contributed to the development of European Union law. And although in its judgments and advisory opinions the Court is giving interpretation to EAEU law provisions, the EAEU Court’s acts are not formally included in the notion of EAEU law as formulated in the Treaty.
For comparison, the EU’s acquis (previously known as “acquis communautaire”, or “acquired by or through the community”) is the accumulated legislation, legal acts and court decisions which constitute the body of EU law. During the process of the enlargement of the European Union in 2004-07, the acquis was divided into 31 chapters for the purpose of negotiation between the EU and the candidate member states. Before becoming a new member of the union, the candidate country is required to adopt and implement a significant part of the EU acquis.
Despite these limitations the EAEU law is progressively transforming into an autonomous legal system as the EAEU Court has pronounced in its acts that EAEU Treaty provisions take precedence over national law and, if they confer rights or legitimate interests to individuals and are sufficiently clear and precise, also have direct effect, i.e. may be relied upon in national courts.
Having made these observations, it is necessary to strengthen the EAEU’s intergovernmental component, giving its members the opportunity to coordinate economic policies on issues not transferred to the supranational level and avoiding separate deals. Today, Eurasian intergovernmental coordination is carried out at the level of vice-premiers who form the Council of the Eurasian Economic Commission, which convenes only once a month. This is clearly not enough. It should be expanded to the level of ministries and departments of all the EAEU countries. Moreover, not dissimilar to the EU’s Committee of Permanent Representatives (COREPER), an institution of their permanent representatives with the Union should be established, which would devote all their time to intergovernmental coordination. Furthermore, it is worth strengthening the powers of the existing bodies of the EAEU – of the EEC and of the EAEU Court – according to the already-agreed rules.
Revenge of the heartland: Geoeconomic determinism
Another unique feature of Eurasian integration, as pointed out by the EDB’s chief economist Yaroslav Lissovolik, is the result of the region’s tellurocratic geography. There is an unprecedented distance of Greater Eurasia’s hinterland/heartland, where most of the EAEU’s territory lies, from the global ocean and accordingly from international markets. Four out of five of the EAEU’s member states are landlocked: Kazakhstan is the largest landlocked country in the world. Belarus is the largest landlocked country in Europe. Kyrgyzstan, apart from being landlocked, is among the countries with one of the highest levels of elevation above sea level in the world. Armenia is the only country of Western Asia without access to a sizeable water space.
In view of the higher transportation costs faced by landlocked economies they are less competitive, as imports and exports are more expensive. According to research by the World Bank, landlocked countries have on average 30 per cent lower trade turnover than countries with access to the sea; continentality reduces a country’s growth rate by 1.5 per cent as compared to coastal countries. Here, the founding of the Eurasian Economic Union can be seen as an answer to this geographic problem, since the EAEU performs a crucial role of improving the access of its members to international markets via reducing customs duties and non-tariff barriers, as well as by advancing connectivity in transportation through the formation of a common transportation space.
It is worthy to note that similar statements on the geoeconomic determinism of Eurasia have already been made by the classical Eurasianists – economist Peter Savitsky (1921) and philologist Nikolay Trubetskoy (1933), which links this argument for pragmatic Eurasianism with the classical one.
- Vinokurov, E. (2018). Introduction to the Eurasian Economic Union. Palgrave Macmillan.
- Trubetskoy, N. (1933). Thoughts on autarky. New Era: Ideocracy. Politics. Economy.
- Savitsky, S. (1921). Continent – Ocean. Russia and the World Market. Exodus to the East.
- Lissovolik Y. (2017). The Economic Geography of the Eurasian Countries. Special report. EDB Marcroreview January 2017.
- Lissovolik Y. (2017). Geoeconomics and the Heritage of Eurasianism. Russia In Global Politics.
- Libman A., Vinokurov E. (2012). Holding-Together Regionalism: Twenty Years of Post-Soviet Integration. Palgrave Macmillan.
- Pedersen, T. (2002). Cooperative hegemony: Power, ideas and institutions in regional integration. Review of International Studies.
- Moravcsik, A. (1998). The Choice for Europe. Social Purpose and State Power from Messina to Maastricht. Cornell University Press.
- Karliuk, M. (2017) The Eurasian Economic Union: An EU-Inspired Legal Order and Its Limits.Review of Central and East European Law.