02.03.2021 Author: Vladimir Odintsov

The Eurasian Economic Union is Alive – and Expanding

EAEU

The Eurasian Economic Union (EAEU), created in 2014 as an international organization for regional economic integration with international legal standing, has already grown significantly stronger in the international arena, and is attracting greater attention from various countries despite the fact that it has still existed for only a short period. The freedom of movement for goods, services, capital, and labor that the EAEU enables, and the coordinated, cohesive policy that it implements in various economic sectors, is eliciting increased interest in cooperating with the union, especially against the backdrop of the irrational policy of sanctions imposed by the West on objectionable states, or those that are unwilling to become completely subordinate to the United States and its allies.

Currently, the EAEU’s members are represented by Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. Tunisia, Syria, and Turkey have also declared that they intend to join the EAEU. Even the major political cataclysms that shook some countries across the Eurasian Economic Union in 2020, including Armenia, Belarus, and Kyrgyzstan, did not affect the future of the integrative association. Specifically, this means decisions such as the heads of EAEU member states ratifying the Strategic Areas of Focus for Developing Eurasian Economic Integration up to 2025, and the granting Uzbekistan and Cuba the status of EAEU observers.

As Russian President Vladimir Putin emphasized in January during a meeting on implementing integration projects in the EAEU’s space, countries in the Eurasian Economic Union approved of the concept of having a common financial market, and are preparing the concept of how to develop a common energy market. In most sectors of the economy, common markets have already been created, and are functioning successfully, and in the others there is movement in this direction, with decisions on practical issues made and the search for optimal models continuing. Naturally, one example of these successful, positive processes is creating a single market, and the manufacture and circulation of medicinal drugs and medical products, something which has taken on particular importance in the context of the coronavirus pandemic that swept the world over the past year.

The first meeting of the heads of state in EAEU countries in Almaty, held in early February this year, confirmed that in 2020 the economy of the “five” managed to avoid the worst-case scenario: according to preliminary data from the Eurasian Economic Commission (EEC), in 2020 the total GDP of the countries in the union declined by only 3.9%. At the same time, it follows from UN data that the drop is less than that for developed countries at 5.6%, although more than that for developing countries at 2.5%.

Nonetheless, the prime ministers focused on the need for additional protective measures against hostile economic actions taken by their Western partners, and the EEC was given instructions to develop those. “It is no secret that now measures like sanctions are being used indiscriminately. They have become a tool that is used offhandedly, without any particular evidentiary foundation. It is simply a club. Therefore, within the framework of the EAEU, mechanisms will be developed on how to counteract these unfriendly actions directed against any single country in the union,” explained Prime Minister of Belarus Roman Golovchenko. Along with that, he added: “Of course, we are not a military alliance like the CSTO, for example, where these mechanisms exist. However, recently the economy has become a battleground no less fierce than real combat operations”. What shape this mechanism will take is not yet clear, although it has been determined that work on creating it will be performed in the framework of the potential for retaliatory measures to be taken against various countries in the EAEU stipulated in the treaty that created the union (for example, in the form of tariff increases or the suspension of trade preferences). The topic of dispute resolution in the WTO is one that will be reviewed especially carefully, since this organization’s board of appeals stopped working starting at the end of 2019 due to the US blocking new arbiters for a lengthy period.

The irrational sanctions policy adopted the West, which is built for the interests held by the United States, and the specific successes scored by the EAEU in opposing this and protecting its own interests, has contributed to an increasing number of states that have requested to be admitted to the Eurasian Economic Union. Recently, Iran began negotiations on joining the EAEU. This step taken by Tehran, which needs a kind of “umbrella” of security, and to expand trade and economic opportunities in the wake of the pressure put on it by the United States and its allies, and pessimistic forecasts for the future of the nuclear deal that was destroyed by Washington, is quite logical. It is still difficult to talk today about the specific timing for Iran’s entry into the EAEU, since this will require resolving many issues. In particular, Iran will have to bring its legal framework into line with those in EAEU countries, which have a visa-free regime and common rules governing the market, including the job market. In addition, it is no secret that not all political forces present in the Islamic Republic of Iran are ready to smoothly perceive how the country would join the post-Soviet “five”, although the most influential political forces in the Islamic Republic of Iran – those that have a conservative persuasion – are now advocating for joining the EAEU. Today, many in Iran understand that membership in the union would reap great benefits for it. Besides some security guarantees, and opening up new markets, this means creating a counterbalance to Washington’s sanctions policy, and by gaining a new “umbrella” that the West has not taken seriously until recently Tehran will be able to more confidently and forcefully negotiate with the United States – and, most important, on its nuclear program. The EAEU is also attractive to Iran because of the presence of the Eurasian Development Bank (EDB) in this union, through which a number of large projects have already been implemented, and that has set on a course towards financing intergovernmental programs.

However, there is no doubt that Iran itself is needed by the EAEU, since this would mean that the bloc’s attractiveness, and the role it could play at the international level, would noticeably increase. With Iran’s accession to the EAEU, its borders would expand to the Persian Gulf, which would entail a tangible change in the geopolitical situation in the Middle East, including in the context of regional security. In addition, we must not forget that the Iranian economy, although it has been severely affected by Western sanctions, is one of the largest in Central Asia and OPEC, the diversification of its economy is in full swing, and measures are being taken to stimulate its precision mechanical engineering, automotive, aerospace, and information technology industries. It is well known that Iran surpassed Turkey back in 2007, on top of everything else becoming the largest economy in the Islamic world. After Saudi Arabia, Iran has its second-largest oil reserves, and occupies a 5.5% niche in the global market for trading petroleum products.

It also cannot be ruled out that Iran’s accession to the EAEU would cause a change in the representation of other Transcaucasian states in the union. For example, while up until now Armenia has been the only country in this region that is part of the EAEU, it could be possible that long-standing talks about Azerbaijan joining the union may now bear fruit, and Ankara could theoretically follow Baku, proceeding from its own economic and geopolitical calculations and reinforced by the desire to “take it out on” a West that has not particularly favored it as of late. And the well-known jealous attitude of the emotional Turkish leader R. Erdogan toward Tehran could also make Ankara accelerate the steps it takes toward joining the EAEU.

Vladimir Odintsov, political observer, exclusively for the online magazine “New Eastern Outlook“.


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