Eurasian Integration as a Response to Neo-Liberal Globalisation

The proposed Eurasian Union (formed by Russia, Kazakhstan and Belarus) favours a capitalist form of economy which is still part of the world economic system. It seeks to reverse in many ways the effects of globalisation, particularly to ensure the sovereignty of the nation state. The objective is to achieve these goals by forming regional blocs.

[Report of lecture given at Centre for East European Language Based Area Studies Conference on Eurasia held at Cambridge University, Department of Politics and International Relations, 31 January 2014]

Mr Gorbachev and his team of reformers were advised that the backwardness of the Soviet economy and the lag in its capacity for innovation were due to its separation from the world economy. However, the move to open markets globally and a property owning market economy have not led to the economic and political advances anticipated. The promised ‘creative destruction’ of state socialism resulted just in demolition and consequently the fifteen former republics of the former USSR have experienced economic decline. Russia lost the USSR’s status as a major world power and its peoples suffered an identity crisis. What the reformers overlooked was the fact that the world market system is driven economically and politically by Western powers pursuing their own geo-political interests through market mechanisms.

It is against this background of decline into a chaotic social order that the ideas of Eurasianism and the proposed Eurasian Union have begun to take root. Political leaders have sought to find an alternative to the neo-liberal practices of the West, particularly to the political and economic hegemony of the USA.

The neo-liberal globalised system has led to the breakdown of state borders to allow the market to flourish and consequently the nation-state has lost powers. The central European post-socialist New Member States of the European Union have lost their sovereign power as they are bound to the European Union by its comprehensive conditions of conditionality. Alternative policies are open to the countries of the Commonwealth of Independent States.

The proposed Eurasian Union (formed by Russia, Kazakhstan and Belarus) favours a capitalist form of economy which is still part of the world economic system. It seeks to reverse in many ways the effects of globalisation, particularly to ensure the sovereignty of the nation state. The objective is to achieve these goals by forming regional blocs.

The New Regionalism approach, developed in Western political studies, regards regions as the successors to nation states. To be successful they require not only an economic basis but also forms of cultural identification and political and social linkages. The proposed Eurasian Union combines such cultural, political and social components, and fits very firmly into this framework.

From an economic point of view there is a large domestic internal market. Russia and Kazakhstan have large currency reserves, and all the countries have a low transnationality index (low value added by foreign companies). Politically, all the countries share common Tsarist and Soviet legacies with a presumption for a strong welfare state. Ideologically, there is a strong national identity linked to Russia as a civilisation with a common language and shared history. There is a much weaker identification among significant parts of the elite with neo-liberal economic outlooks and individualism.

However many commentators express scepticism. The current dialogue on Eurasianism is ambiguous and involves roles for both state and market. I would single out three emerging positions.

First is the idea that the envisaged regional association would emerge as a ‘stepping stone’ to the current world system, dominated by the hegemonic Western states. The argument here is that if markets are to predominate in the economic union, they would exert their own logic and would drive the Eurasian Union to the neo-liberal world system. The USA is recognised as a hegemon which shapes regional formations (such as the European Union). So the development of an alternative would not arise. The Eurasian Union would become another economic region in the world system and would be driven by global markets rather than by states set in regional blocs.

The second opinion is that the Eurasian Union would follow a route down a cul-de-sac. Most Western critics take this point of view – particularly those from the European Union - and contend that a state led economy would lead to protectionism and decline. They claim that it would cut off the Eurasian member states from innovation and progress. The argument here is the familiar one, articulated by Margaret Thatcher during the time of Gorbachev: ‘there is no better alternative to the neo-liberal model’.

There is also a third option: that of a political and economic counterpoint. The Eurasian Union might well secure a polity based on more collectivist and conservative religious values, with state economic coordination and a form of democracy different from electoral democracy (or not based on Western conceptions of democracy at all). It would exchange with the dominant world system but would not be part of it. It would be a national form of capitalism.

Policy modelled on the European Union would not work. There are now thirty-five chapters of its Acquis Communautaire ranging from the free movement of persons to the compatibility of cultural and visual aids policy. The European Union compels the commitment of its member states to common values and institutions; the process of free movement of capital, labour, goods and services has undermined the social and economic fabric of the member states. The EU member states have lost powers which is not the intention of the Eurasian Union.

I would suggest that an alternative structure is that of the former (British) Commonwealth. The Dominions of the British Commonwealth not only had a synergy in an economic sense with the United Kingdom which provided manufactured goods in exchange for agricultural and primary products, but the Commonwealth also had a social consensus based on a common language, culture and religion. The political institutions and ideology were also shared. The people had similar values which were socialised through churches and a similar educational system. The members identified common enemies and had common friends. They were however separate sovereign states not ruled from London.

A problem here is whether a Eurasian Union of only three countries would make an effective economic base. In Forbes’s Top 2000 world corporations, in 2013 Belarus had not one company, Kazakhstan had two (one gas company and a bank); Russia 30 (10 in minerals, 7 in oil and gas and three banks). Whereas Brazil had 41 corporations in the list, India 66 and China outstrips all these countries with 136 corporations occupying the first, second and eighth ranks in the Forbes list.

To make a viable alternative economic regional bloc, cooperation with China and other BRICS countries would be essential. When combined, Russia, India and China have considerable manufacturing and military capacity and enormous internal markets. They already have considerable capacity for research and development. Strengthening regional associations would minimise contagion from global financial crises.

The dynamics of the world system – particularly the rise of semi-core countries and the relative decline of the still dominant USA – leads to a longer term scenario, the developments of counterpoints, of which a Eurasian Union might become an important constituent. A Eurasian Union alone could not mount a very serious challenge to the hegemonic core. To build any significant alternative to the neo-liberal global order would need combination with other regions in semi-core countries, particularly the Shanghai Cooperative Organisation. Such economic alternatives could prioritise economic development, channel investment and provide employment through administrative forms of collective economic coordination.

A Eurasian Union could legitimate a different state system and more collectivist traditional values including those developed under the Russian and Soviet past. Such developments would provide the basis for a more pluralist and multi-polar world. It would be a capitalist alternative - organised national capitalism.

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