L’Invité D&B: The Eurasian Union and the health crisis: lacking integration and geopolitical ambitions

L’Invité D&B This crisis is testing both the advanced European and underdeveloped Eurasian supranationalisms. By Dionis Cenusa

By Dionis Cenuşa° – initially published on IPN

° Dionis Cenuşa is a political scientist from Moldova who works as Program Director on Energy Security at the Independent Economic Think-tank “Expert-Group”, based in Chisinau.

In the context of the Covid-19 pandemic, the Eurasian space is being used to promote pro-Russian narratives in the international arena, including the urgent need to end the economic and financial sanctions against Russia...

Being at the epicenter of the epidemic has imposed on the European Union particular existential dilemmas whose common feature is the prevalence of national interests over supranational impulses. The exceptional degree of European integration has created interdependencies that are beneficial in normal situations, but which are turning out into hazards in times of crisis. These European dilemmas are not evident in the much looser forms of integration project unfolding in the eastern proximity. When Vladimir Putin and other spiritual parents of the Eurasian Economic Union (Eurasian Union) plagiarized some of the EU’s functional mechanics, they avoided including any substantively real supranational dimension to the institutions: no place here for sharing common benefits and assuming collective responsibilities and risks. The 2020 health crisis has shown that interconnections within the Eurasian Union have a very low intensity, and Eurasian structures have minimal responsibilities – regulating the customs regime and coordinating sectoral policies. Therefore and for the exact opposite reasons to those prevailing in the EU, the nascent Eurasian integration project is underdeveloped enough to be as paralyzed by the health crisis as the European project has seemingly been.

The political approach that the heads of Eurasian states formulated in response to the health crisis (April 14, 2020) places the governments and the national banks before the Eurasian Commission in the institutional hierarchy of those responsible for developing concrete anti-pandemic solutions and allocating the necessary financial sources. There are still gaps between political decisions taken at the national level and the practical dimension of the status quo in the Eurasian integration process. For these reasons, the President of the Eurasian Commission, Mikhail Myasnikovich, proposed eliminating inconsistencies by implementing “strategic directions for the development of Eurasian economic integration by 2025”, whose concept contains over 300 recommendations, which are being finalized. In Myasnikovich’s view, the “unfulfilling of the commitments” is at the heart of the problems facing the Eurasian Union, putting pressure on trade relations and even “mutual trust”. However, in an acute period for any integrationist project, the Eurasian Union aims to deepen and broaden the economic spheres of integration (digitalization of trade and customs services, cooperation in space, etc.). On March 6, in talks on improving the Eurasian project, Prime Minister Mikhail Mishustin suggested that Russia could take over “the role of the locomotive of Eurasian integration” (Eurasian Commission, March 6, 2020). Two months later, the Russian prime minister is undergoing treatment against Covid-19, and Russia has become the central front of the pandemic in the Eurasian Union – 134,687 cases as of May 3 and more than 4,000 new cases registered daily since March 17.

In essence, the management of the pandemic within the Eurasian Union depends on the anti-crisis capabilities of national political regimes, which, except for Armenia and Kyrgyzstan, are authoritarian. The scenario of “effective” Chinese authoritarianism is, however, unlikely in the Eurasian Union. No state disposes simultaneously of an effective vertical of power, enormous capacities for political, institutional, economic, financial and human mobilization, as well as the possibility of sacrificing human lives with the same level of impunity as in China. Moreover, the Eurasian giants – Russia and Kazakhstan – have built economic systems disproportionately around oil production, which in the short and medium-term are in freefall, threatening accelerated budgetary crisis. Of all the states of the Eurasian Union, only Armenia and Belarus benefit from EU bilateral financial assistance (€ 92 million and € 80 million respectively) and other funds provided to the Eastern Partnership countries during the pandemic.

The inability of the Eurasian Commission to articulate financial measures, in the absence of a Eurasian budget, substantially reduces the prospects for advancing Eurasian integration during the health crisis and beyond. Contrary to these structural constraints, however, the leaders of Eurasian Union states do not avoid maintaining high geopolitical ambitions. Thus, in addition to coordinating anti-pandemic actions, the Eurasian Commission intends to accelerate trade liberalization negotiations with third countries. These goals do not include the accession of Uzbekistan, whose president Shavkat Mirziyoyev has opted for observer status “to clarify what is useful, and what isn’t”. Uzbekistan’s reluctance may deepen if the Eurasian Union fails to demonstrate its usefulness in managing the health crisis, beyond the development of poorly resourced recommendations.

The reaction of the Eurasian Union to the pandemic

The pandemic has spread inside the Eurasian Union at a slower pace than in the EU. The first cases of infection were imported from China, Iran or Europe. Until the spread of the virus by local transmission, Eurasian states had enough time to impose travel restrictions on foreign nationals. The Central Asian republics closed their borders practically immediately (1-2 days) after the identification of the first infections, Russia and Armenia were slower (after about 3 weeks). Belarus’s borders are not closed yet, but Belarusian citizens can only opt to travel to Russia because their western neighbors have sealed the borders since mid-March, along with other European countries (See Table 1).
 

Table 1. Key-figures concerning the Covid-19 outbreak in the Eurasian Union, May 4, 2020

 ArmeniaBelarusKazakhstanKyrgyzstanRussia
First caseMarch 1Feb. 28March 13March 18Jan. 31
Total infections2.38616.7053.964830134.687
Death toll359927101.222
Closure of the bordersMarch 24No lockdownMartie 15March 17March 18  

Sourse: Johns Hopkins, data compiled by the author

If the pace at which the virus spreads in Russia maintains (over 10,000 cases a day since 17 March), then some Eurasian states will feel a double negative impact. According to the World Bank, Russia’s economic slowdown may considerably reduce the appetite for imports (Belarus, Armenia) and significantly reduce remittances, including due to the depreciation of the Russian ruble (Armenia, Kyrgyzstan).

Table 2. Exports to Russia, 2017-2019, billion dollars

 ArmeniaBelarusKazakhstanKyrgyzstan
Total  RussiaTotalRussiaTotalRussiaTotalRussia
20172,10,54029,212,848,54,61,70,265
20182,30,64133,712,861,15,21,80,356
20192,60,71157,75,6

Sourse: UN Comtrade

The package of anti-Covid-19 measures adopted by the Eurasian Union (Belta, April 10, 2020) sums up previous decisions taken between 16 March and 8 April. The actions combine very concrete customs and tariff regulations (abolition of customs duties on certain imports, restriction of vital exports), but also various declaratory proposals. The symbolic significance of the measures is greater than the practical arrangements actually put in place by the Eurasian structures. The content of these measures outlines at least three limits of the Eurasian form of supranationalism:

First of all, anti-pandemic actions to prevent and minimize the consequences of the health crisis mainly involve national institutions (customs services, market regulators, national banks, etc.). Of the total of 20 actions associated with the “anti-Covid-19 package” approved by the Eurasian Intergovernmental Council on April 10, only three measures expressly address the Eurasian structures. National institutions and processes have thus been in the ascendancy throughout.

The second aspect concerns the degree of financial coverage from supranational resources. The financial instruments intended to counteract the effects of Covid-19 stem from, on the one hand, the Eurasian Development Bank and, on the other, the national banks of the five Member States (Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia). The only real collective financing instrument, specified in the “package of anti-Covid 19 measures”, is the Eurasian Stabilization and Development Fund (Anti-Crisis Fund), managed by the Eurasian Development Bank. It has $ 8.5 billion, of which only 10% is available in cash, and the rest consists of payment obligations from the five member states of the Eurasian Union and Tajikistan. The rapidly worsening situation in Russia anticipates the idea that the macro-financial stabilization of the Russian economy will require multiple resources, including those deposited in the Anti-Crisis Fund. Currently, almost 90% of this Fund’s budget is covered by Russia’s contribution ($ 7.5 billion). Thus, the increased threat to Russia’s domestic budgetary position limits the capacity of the Eurasian structures to provide a collectivized financial response to the pandemic.

The third element that explains the limited nature of Eurasian supranationalism is the omission of Eurasian solidarity mechanisms, aimed at concretely helping small and medium-sized enterprises or citizens through specialized programs coordinated directly by the Eurasian Commission and aimed at national governments (supporting affected industries, special unemployment funds, etc.). Although the Eurasian institutions have been given a clear mandate to facilitate the removal of any barriers to inter-state trade, their autonomy is entirely dependent on the political decisions of the national political centers. Russia opposes an independent and robust European-style supranational bureaucracy, which Russian Foreign Minister Sergey Lavrov sees as “too persistent” and sometimes “obsessive” (MID.ru, April 25, 2020). In reality, the EU institutions operate in a much more clearly defined structure of interdependence and legal certainty where the treaties lay down the balance of power between the national and supranational levels of authority. Denying this principle is a substantial obstacle in the development of the Eurasian project.

Geopolitical ambitions beyond Eurasian borders

Since the beginning of the health crisis, the Eurasian Commission has been refocused on monitoring and coordinating relations between national authorities in order to forge the implementation of anti-Covid-19 measures. The repeated protestations of Eurasian Commission President Mikhail Myasnikovich about the incomplete materialization of Eurasian commitments offers a reminder of the as yet limited and partial nature of Eurasian supranationalism and the massive weight of the intergovernmentalist approach. Eurasian officials rarely, if ever, refer to the Treaty establishing the Union or to the Court of the Eurasian Union. In other words, the direct effects of “Eurasian legal acts” and the keen sense of the legitimacy of supranational structures are not the ones that dictate the rules of the game. The latter forms out from the capacity to achieve political compromises.

The complementarity pursued between the deepening of economic integration in the Eurasian Union until 2025 and the 2030 economic development strategy of the Commonwealth of Independent States (CIS) visualizes a structure of concentric circles with Russia dominating in the ex-Soviet space. Therefore, in both cases, geopolitical reasoning takes precedence over economic, functional or sectoral rationality. While Eurasian integration tends to expand and intensify current interdependencies between Member States, the CIS has become a waiting room for possible waves of enlargement of the Eurasian Union. Thus, if Eurasian integration constitutes the driving force behind Russian geopolitical influence in the region, the rest of the post-Soviet organizations represent the existing geographical boundaries of Eurasianism.

Before the health crisis, the Eurasian Union was promoted as an intermediate means of communication between Russia and the EU, especially after the cooling of bilateral relations caused by Russian aggression in Crimea and the Donbas. Prior to that, the initiative for a free trade zone “from Lisbon to Vladivostok” between the EU and the Eurasian Union aimed to discourage association agreements signed by Moldova, Ukraine and Georgia with the EU. The assessments of Janis Kluge and Michael Richter show that a free trade agreement between the EU and the Eurasian Union would come with multiple economic risks for the stakeholders in the East, but also with political instability for Russia.

Following the outbreak of the pandemic, like other structures in which Russia is present (BRICS), the Eurasian platform is being exploited to promote the “cessation of unilateral economic and financial sanctions” (Eurasian Union, April 14, 2020). Besides, Russian Foreign Minister Sergey Lavrov emphasizes the idea that European integration is being tested, as states are eager more and more to “rely on their own powers”. Hypothetically, the combination of two factors can help Russia create gaps in European sanctions – a deepening of the Russian health crisis and solidarity with Italy, where pro-Russian sympathies have widened, and the number of Eurosceptics has risen from 47% in 2018 to 67% in April 2020 (FinancialTimes, April 2020). The idea of conferring “flexibility” on European sanctions against Russia is already being promoted as a measure to unblock the stalemate in the implementation of the “Minsk Agreements” (CrisisGroup, April 2020). Similar to the conditionality mechanism used by the EU in providing macro-financial assistance, sanctions against Russia could be gradually lifted depending on the progress made by the Russian side in meeting its commitments.

Instead of a conclusion…

The health crisis highlights the existence of various forms of supranational integration existing globally. These projects can be viewed through the prism of internal political cohesion, the desired solidarity attaching to common financial resources and the resilience of supranational regulations. But this crisis is testing both the advanced European and underdeveloped Eurasian supranationalisms.

When national egoism dominates over forms of collective inter-state solidarity, the role of supranational organizations may become redundant. Therefore, the measures initiated by the EU can serve as a source of inspiration for Moscow. However, in the view of the Eurasian Union, some EU actions are inapplicable and others – undesirable, because Russia opposes a supranational bureaucracy as robust as the European one.

Russia is the only state that can decide how far the Eurasian Union must move in the direction of an interdependent supranationalism, with the implied reduction in authority of national governments. But until then, in the context of the Covid-19 drama, the Eurasian platform is being used to promote pro-Russian narratives in the international arena, including the urgency to end economic and financial sanctions against Russia.


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