Armenia’s Lesson for the Eurasian Union: The Future of Integration

21.05.2018

Heading east

On May 14, Russia hosted a meeting of the Supreme Eurasian Economic Council in Sochi, having assumed the rotating presidency of the EAEU in 2018. The meeting coordinated the signing in Astana on May 17 of a non-preferential EAEU-China economic agreement and a provisional FTA agreement with Iran. These major steps forward resulted from several years of efforts by the Eurasian Economic Commission and will enable the EAEU to gain a firmer international foothold despite the West’s isolationist moves.

The first FTA agreement the EAEU signed with Vietnam in 2016 has helped to boost EAEU exports, establish new businesses and attract investment. Some examples are Belarus building a MAZ assembly plant near Hanoi and Vietnam investing in a milk factory in the Moscow Region.

With the West cutting off relations with the EAEU, the latter is clearly leaning towards Southeast Asia.

Not only is it an alternative to the West, it is also more promising in terms of export markets for high value-added products (the EU markets being filled to capacity long ago). The “eastern” APEC has been ahead of the “western” EU in imports from EAEU countries for the last two years.

The West will not overlook the EAEU’s advances in the East. Jealousy aside, it fears its successful interoperability with the Silk Road project, something that may further undermine the already weakened EU positions on the continent. Brussels is seeking to energize its relations with a number of EAEU countries, while demonstratively ignoring the union as a whole. This transparent tactic is aimed at weakening the EAEU, which is regarded as a “rival” by the EU. Without exaggerating the threat, it is more important to develop EAEU’s relations with outside partners on the supra-national, rather than national level.

The Armenian lesson

One of the top stories in the media was the Sochi meeting between President Vladimir Putin and Armenian Prime Minister Nikol Pashinyan. The talks did not yield anything sensational: Pashinyan, whom the media had characterized as being skeptical of Eurasian integration, confirmed his country’s commitment to its allied obligations and denied any possibility of “reversals on the foreign policy track.”

It is geopolitics that dictates the geometry of Yerevan’s national interests, no matter who is in power. But this does not mean that the Armenian political crisis is resolved and its causes are not worth analyzing.

Regardless of Pashinyan’s reassuring statements, the final denouement in Armenia is some way off yet. Of course, rallies and protests are a common occurrence in Armenia. In the spring of 2018, the Armenians were venting their pent-up dissatisfaction with the former president, Serge Sargsyan.

However, the election of a new prime minister has failed to put an end to the confrontation within the political class. The “old” and “new” teams continue their tug-of-war for control of the administrative apparatus and economic resources. Players opposing Eurasian integration and funded from sources outside of the EAEU hold a lot of influence in Armenian media.

But most importantly we should not turn a blind eye to the socioeconomic reasons for the protest. The Armenian “Electricity Maidan” in 2015 did not cross the tipping point, but the so-called “velvet revolution” did in 2018. The wide gap between the rich and the poor and the unresolved problems in Armenia’s sputtering economy will continue to fan protest sentiment and radicalize politics.

In the spring of 2017, a wave of economic protests swept Belarus with its totally different economic model. There were no political demands but the rallies were quite impressive. Protests are sparked off periodically in Kazakhstan and Russia.

It is silly to believe that the wave of protests inundating the political systems in the West will spare the EAEU and the CIS.

We should work to get out ahead of the discontent and prevent radical groups from hijacking and politicizing socioeconomic protests. Making a choice between growth and stability is increasingly difficult amid the growing political chaos in the world. But the only way a breakthrough can be achieved is if internal stability can be maintained in the face of mounting global instability.

Inventory of the EAEU

The meeting in Sochi offered a kind of cross-section of the situation in the continental nucleus of the post-Soviet space. Its agenda turns the spotlight on the main “barriers” and “springboards” set to last for the next 3 to 5 years in the context of the Eurasian project.

The EAEU should assess the work done to date and create mechanisms to monitor the implementation of earlier decisions. This could be done by the Eurasian Economic Commission, if it is endowed with additional powers, or through cooperation at the intergovernmental level, or some combination thereof.

In Sochi, President of Kazakhstan Nursultan Nazarbayev suggested establishing an intergovernmental group to analyze the implementation of earlier EAEU decisions, gauge persisting trade barriers, and elaborate recommendations on how to remove them. Previously, ideas of this kind were discussed at the expert level.

As regional integration progresses, an increasingly bulky administrative apparatus is required. The European Commission, for example, has a staff of 32,000 (not counting 7,500 employees at the European Parliament and 3,500 at the Council of the European Union). The Eurasian Economic Commission has about 1,000 employees who must cope with growing workloads as integration advances. We need “drive belts” of sorts to keep supranational bodies efficient.

The most often discussed problem is that of trade barriers and restrictions within the EAEU, which lead to periodic trade disputes. With the advance of integration, it will affect increasingly more interests and sensitive issues. Unless we create effective mechanisms to monitor and survey the implementation of decisions, we risk getting bogged down in a clash between bureaucracy and business interests.

The humanitarian pivot

The effectiveness of integration cannot be measured by economic indices alone. Given the instability in the world economy and growing protests, those failing to give sufficient attention to public views and cooperation with the non-public sector will pay a high price. As integration advances, the EAEU will inevitably turn into an increasingly technocratic organization whose mechanisms can be fathomed by narrow specialists alone. But this will cause growing incomprehension on the part of the public.

Today we observe declining public support for the EAEU in the member-countries. According to a Eurasian Monitor study commissioned by the Eurasian Development Bank, the number of those with positive views of the EAEU has dropped by 10% on average over the last three years. In Armenia, the level of support was 50% in 2017, in Belarus 56%, in Kazakhstan 76%, and in Russia 69%. But the general level of support is still sufficiently high. The drop is due to the rising numbers of people who feel indifferent towards the EAEU, while its opponents average just a few percentage points. But the overall trend merits attention.

If we fail to effectively communicate the advantages each member-state stands to derive from cooperation with the EAEU, their populations will not notice even the real successes. This is why EAEU public relations should be put in a separate category of humanitarian support for Eurasian integration that includes information campaigns, education, dialogue venues, and contacts with civil society.

The EAEU needs reasonable and even-handed promotion based on objective information and targeting different social groups. Importantly, complex integration processes should be explained using simple language, for otherwise public trust in the EAEU will fade. It makes sense for the EAEU member-states to devise a joint roadmap and approve organizational decisions.

Finally, a joint flagship project to display what the EAEU is capable of might be needed as well. Kazakhstan is proposing transport infrastructure projects. Russia is speaking about space and nuclear cooperation. The important thing, while choosing a showcase project, is to make it understandable and useful for citizens of the EAEU states. It is high time to start working on new project funding mechanisms within the EAEU and the Eurasian Development Bank. Support is needed not just for commercially predictable local projects but for specific projects with integration potential.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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