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23 November 2015

Why the Eurasian Union keeps coming back

And how the EU should respond to Moscow’s EEU Common Economic Space proposal, but not how the Kremlin expects 

In late October 2015, Russia brought the Eurasian Economic Union (EEU) Common Economic Space proposal back as the primary topic of European Union-Russia strategic relations. Moscow, disguised as the EEU, officially offered Brussels to begin a dialogue on coordinating trade politics and merging the EEU and EU’s economic spaces. It appears that nobody noticed this proposal at the time, but a few weeks later, EU Commission’s president, Jean-Claude Juncker surprised everyone by responding positively to Moscow’s proposal, agreeing “to draft new proposals on cooperation with the Eurasian Economic Union”.

Taking into account the state of EU-Russia affairs, sanctions, the active anti-western propaganda campaign in Russia and general fallout over the annexation of Crimea and war in Ukraine, it seems that this development is out of place at a minimum.

Exactly a year ago this topic was brought up again by both German politicians and the expert community, but was discarded right away. Was Syria enough to revitalize this project? And more importantly, what does the Kremlin want to achieve with this cooperation proposal?

Was it not a Greater Asia already?

The idea of a unified Greater Europe from Lisbon to Vladivostok is not a new one. Voiced by Gorbachev in the late 1980’s, it became a leitmotiv of the “European phase” of president Putin’s first term in office. Conceptualized by Sergei Karaganov, it envisioned a common economic and cultural space that would unite two parts of one civilization – Europe of the West and Europe of the East. Magnificent as a concept, but in practice, today it represents Moscow’s desire to negotiate an economic and to some extent, political deal, where the EU would treat Moscow as an equal party, and allow for Moscow to pursue its integration project, shaping the so-called near abroad in a way the Kremlin sees fit. Simply stated, Moscow wanted the EU to accept its domestic and foreign political choices without question for the sake of joint economic developments.

For various reasons, neither Russia, nor the EU were ready to give it a full try in the 2000s. Now, after invading Ukraine, such a proposal may seem simply bizarre coming out of a Kremlin that has officially “pivoted East” and is waging a de facto sanctions war against the EU. Even the architect of a “Greater Europe” of the 2000’s, Sergei Karaganov, dismissed it as pointless. Moreover, Karaganov recently proposed an alternative to the “Greater Europe” concept – what one may call a “Greater Asia” vision, where Russia, with its EEU must join forces with Chinese “Silk Road” project to build a common Eurasian space that would develop Central Asia and bring Russia into the Asian markets, increasing ties with Iran and India and the global South generally. Karaganov specifically blames Russia’s intellectual euro-centrism for the lost opportunities of the past 20 years, seeing Russia’s only chance to successfully develop in Asia.

It seems though, the attempt to “pivot away” was a false one, and with very little hope to substitute Europe with Asia, the Kremlin is making another attempt to resolve its most pressing issues with its European “partners”.

Is it only sanctions?

In fact, in its rhetoric, the Kremlin has continuously reminded its domestic audience, as well as potential sympathizers in Europe, that Russia has always been pro-integration and is open to discuss ways to avoid future conflicts, making everyone more prosperous in the process. Today this call goes out to the Europeans who would prefer to leave Ukraine aside and find a solution to get back to business as usual.

If realized, the EU-EEU common economic space will allow Moscow to challenge two things it dislikes most: the EU-Ukraine Deep Comprehensive Free Trade Act (DCFTA) and Transatlantic Trade and Investment Partnership (TTIP). Moscow’s proposal implies trade politics coordination, which would give Russia a say in how the DCFTA with Ukraine is implemented, thus rendering it pointless. It would also allow Moscow to affect the TTIP negotiation process, slowing it down as much as possible. As mentioned by President Vladimir Putin in his UN address in October, Russia resents exclusive economic associations, and by getting the EEU to the negotiation table, Moscow can undermine both the DCFTA and TTIP from within.

What the Kremlin wants is much less forward thinking than a vision of a unified Europe. In addition to desiring to undermine these trade agreements, faced with the most systemic economic crisis since 1990s, and oil prices that do not want to “bounce back” as Putin predicted, Moscow desires to change the only thing it thinks it can – sanctions.

Moscow is convinced, and not without reason, that there are those in the EU who would gladly “forget” about Ukraine and lift sanctions, allowing it to rebuild the necessary financial liquidity Putin’s economy so desperately needs - a need which will only increase with time. As pointed out by Russia’s minister of finance, Anton Siluanov, the Russian Reserve Fund will be exhausted in 2016, thereby complicating bail outs of numerous state corporations. The Kremlin has already had to cut its budget expenses for 2016, and without any new source of economic growth in sight, new ways to convince the EU to alter its stance on sanctions are needed, be it another Grand Project, a joint fight against ISIS or something entirely new. It does not matter that sanctions have just been prolonged for another 6 months - Moscow’s game goes beyond that.

How Europe should have responded?

Understanding the real reasoning behind Moscow’s offer, the EU should approach this matter strategically. Clearly, there can be no real discussion of an EU-EEU common economic space today.  Either for reasons of economic incomparability, the shallowness of Eurasian Economic Union or for political issues, like Russia’s actions in Ukraine, the EU should reject this proposal.

Instead, I would argue that the EU needs to respond asymmetrically, proposing an EU vision of a possible common space with Russia. The EU should clearly state the criteria upon which it may take place, including economic and political requirements Russia must accomplish before even commencing negotiations. It stands to reason that Putin’s Russia would not meet EU’s requirements today, making this offer a long term strategy. However, developing and communicating a strategic European vision for its future relations with Russia now will benefit all parties in the long run.  

First, the EU would clearly indicate that Russia is indeed part of Europe and could one day participate alongside other EU members as a rightful member of European civilization. This would end the long debate, exploited by many in and around Russia, that Russia is non-European in nature and that the EU desires to keep it out.

Second, it would send a clear signal to reasonable statesmen, the business community and all who support the European choice for Russia, that there is a plausible happy future for EU-Russia relations given democratic changes in Russia take place. The power of this possible harmonious future should not be underestimated.

Third, it could trigger the start of a real discussion, both in Russia and Europe, of a desirable common future and possible ways to achieve it.

Europe desperately needs a clear vision of where and how it sees Russia in the future. By keeping silent on the “Greater Europe” option, the EU feeds those in Russia who favor the Mongolian roots of the Muscovite state.  It is only logical for Europe to learn from the experience of the past 25 years and recognize that a Russia not of Europe means a considerably less stable and secure Europe itself. And as we clearly see now, Russia by itself is incapable of reaching Europe without Europe’s help. 

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