Monday

5th Dec 2016

Column / Crude World

Why Putin's union doesn't want to work with the EU

  • Russia's Putin and other leaders of the Eurasian Economic Union (Photo: kremlin.ru)

In late November 2015, European Commission president Jean-Claude Juncker told Russian president Vladimir Putin in a letter that he had asked commission officials to draft new proposals on cooperation between the EU and the Eurasian Economic Union (EEU).

The idea was promptly condemned by officials from the EU's eastern member states as sending the wrong signal to Russia at the wrong time. Although this reaction is understandable in light of Russia’s uncooperative stance on Ukraine and Syria, the suggestion is nonetheless interesting in and of itself.

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To dismiss institutional cooperation out of hand is not only arrogant, it also risks being seen as seeking a strategy of divide and rule, playing off individual EEU states against each other; precisely the same criticism often voiced by Brussels about the way in which Russia engages the EU.

On the contrary, seeking cooperation in one way or the other could act as an important test of the extent to which Russia is genuinely interested in seeing the EEU establish ties with Western regional organisations. Doing so is important as there are a number of reasons to believe why Russia may not be interested in pursuing meaningful cooperation between the two organisations at all.

From Moscow with little love

When the EU and Ukraine negotiated a Deep and Comprehensive Free Trade Agreement (DCFTA), Russia raised a number of objections.

According to Moscow, the treaty would cause the Russian market to be flooded with EU goods under the guise of Ukrainian products. Russia also alleged that EU technical and product standards, which Ukraine would have to adopt under the DCFTA, would then also apply to products made by Ukrainian enterprises that sell products to Russia.

According to Russia this would harm bilateral trade, for which it should be compensated. Although presented as genuine, these objections were easily rebuffed. Goods exported to Ukraine from the EU and sold on to Russia would still be regarded as made in the EU under WTO rules, and thus subject to Russian import tariffs that apply to the EU.

Moreover, technical standards would only apply to sales on the Ukrainian domestic market, or to the EU market, meaning Ukraine is free to produce for export to Russia according to Russian standards.

Although aware of the bogus character of these complaints, the EU nonetheless postponed DCFTA implementation for a year in a bid to accommodate Russian concerns. Also, German foreign minister Frank-Walter Steinmeier offered to sign a political statement on EU cooperation with the EEU as a way of accommodating Moscow.

In a tell-tale sign of what was to come neither one of the initiatives aroused any interest from Russia. Instead, Moscow slapped trade sanctions on Ukraine the second the DCFTA entered into force. Moldova suffered a similar fate when it ratified its DCFTA. There too, Russia imposed trade sanctions banning imports of processed meat citing concerns over African swine fever.

Sovereignty, Kremlin style

The manner in which Russia reacted to Moldova and Ukraine’s signing of their respective DCFTA’s goes a long way in showing the degree to which the Kremlin is interested in pursuing meaningful cooperation between the EEU and the EU. By slapping sanctions on both countries Moscow effectively demonstrated the principal motivation underpinning the EEU’s creation.

The Eurasian Union appears to have been designed not with the aim of fostering real economic integration within the post-Soviet space, but rather with the primary objective of preventing the westward regional integration of former republics out of a concern of losing influence and control over former Soviet territories.

In other words, if you do not wish to toe the Kremlin line, there will be consequences. To say this is a 19th century black and white interpretation of what constitutes sovereignty is the understatement of the decade.

So what is next?

Ultimately, whether comprehensive cooperation between the EU and the EEU is possible one day rests firmly on the full implementation of the Minsk Agreement on Ukraine. However, since Moscow shuns few opportunities to claim they are no party to the Minsk Agreement in the first place, one should not have high hopes that Russia will ever abide by the agreement.

That said, unwillingness on the part of the Kremlin need not mean that the EU should not attempt to seek cooperation with the Eurasian Union. Doing so will undoubtedly further expose the fact that Moscow created the EEU with the sole purpose of keeping countries under its belt, rather than seeking any real regional economic integration. If anyone doubts this, please call Kiev or Chisinau.

In the longer term, Russia’s economic performance, its behaviour vis-a-vis its neighbours and China’s Silk Road is likely to determine the EEU’s fate.

Given that the Russian economy is set for stagnation in the years to come, the EEU’s attractiveness to its members is set to erode further. Already there is disillusionment about membership and Moscow’s heavy handed tactics against Ukraine and Moldova have certainly not helped in making countries any more enthusiastic about being part of Putin’s union.

With prospective members having signed agreements with the EU and existing EEU members increasingly looking east to China’s Silk Road, the Eurasian Economic Union looks destined to become the latest in a string of failed initiatives to bring about integration in the post-Soviet Space.

The Crude World monthly column on Eurasian (energy) security and power politics in Europe’s eastern neighbourhood is written by Sijbren de Jong, a strategic analyst with The Hague Centre for Strategic Studies (HCSS), specialised in Eurasian (energy) security and the EU’s relations with Russia and the former Soviet Union.

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