What Went Wrong with Eurasian Integration and How to Fix It

14.11.2017

Obviously, this is not the best period in the political history of Europe. But there is no cause for gloating or even a condescending attitude. Current EU developments are an incentive for studying EU experience and reflecting on how to avoid their mistakes. All the more so now that other integration unions, particularly the Eurasian Economic Union (EAEU), which is most important to Russia, are not making big strides. The most interesting practice that might be borrowed from Europe is their system of intergovernmental cooperation, which both protects the sovereignty of the member states and promotes integration.

On January 1, 2018, Russia steps in as the chair of the Supreme Eurasian Economic Council, the main political institution of the Eurasian Economic Union, and the Eurasian Intergovernmental Council that includes the heads of state and their authorized deputies. The chairmanship is a one year term, enough time to accomplish several goals. The Russian Government appears serious about addressing the organization’s goals. It is falling back on the best civil servants and experts and is formulating ambitious and yet practicable objectives. To implement them, it will be necessary to take into account both the internal situation in the EAEU and the experience of other integration unions.     

Therefore, the start of the Russian chairmanship is simultaneously motivation for analyzing what has or hasn’t been done and for comparing the EAEU’s record with other examples of intergovernmental cooperation in the world. What might interest us first is the record of European integration that has fallen on hard times. The sturdy edifice of the European Union is being battered by one political storm after another. The fiasco of the Constitution for Europe in 2005, the financial and economic crisis in 2009−2013, the refugee crisis in 2015, the British referendum and the start of talks on the British withdrawal from the EU in 2016−2017, and finally the first rumblings of the Catalonia crisis in the fall of 2017.

Turn by turn, these developments have called into question the values that have underpinned European integration since its inception, the equality of the members, progress towards a united Europe, the solidarity of the member states in the face of internal and external challenges, the protection of human rights and the right of nations to self-determination, and the ability to internally uphold the values that Europe preaches to others. Two populist governments in Eastern Europe – Hungary and Poland – are openly disregarding certain basic principles of democracy in the EU. External subjective challenges include an obvious crisis of trans-Atlantic relations linked to the dramatic internal changes in the US, the erstwhile friend and sponsor of European integration. After suffering a humiliating defeat in the race for global superiority, America is rethinking itself based on the expedients available to it by virtue of its tradition and political culture. This rethinking is hitting Europe on the rebound and undermining its decades-old certainty that the Atlantic is something they can always lean on in times of trouble.

Internally, the EU is facing a leadership problem. France has been weakened in recent years, as has its ability to balance with Germany. The election of a young and energetic president, Emmanuel Macron, seemed an optimistic sign. But the parliamentary elections in Germany that were held a few weeks ago have complicated the situation even further. The ruling Christian Democrats again gained more votes than the other parties that made it to the Bundestag. But, like the main opposition force, the Social Democrats, they have lost seats by comparison with past elections. And they lost them to the opposition, notably to the rightwing radicals from the Alternative for Germany party. Judging by all forecasts, the effort to form a new government will persist into January 2018 and the government will be tripartite. Later, however, it is possible that Angela Merkel will resign federal chancellorship, the office she has held since 2005. In a sense, therefore, Macron has come too late: Merkel is tired of waiting for a worthy partner, with whom to lead Europe towards new frontiers of integration. Generally, European integration, despite certain isolated splashes of optimism, is in a state of semi-stagnation and there is no reason to be happy about this.

Our own effort for Eurasian economic integration is also giving cause for alarm. Moreover, the Eurasian Economic Union is far less stable internally than the EU that has accumulated huge bureaucratic and institutional inertia over the decades of its existence.

The Swiss philosopher Henri-Frederic Amiel wrote in the mid-19th century that “Each man starts out anew in this world. It is only institutions that become wiser. They keep our collective experience.”

In this sense, Europe has managed to do the main thing, creating institutions that operate under any political circumstances. In other words, no matter what we say or write about the problems besetting the European Union, they are problems of a higher order than those threatening the development or even existence of the EAEU. European integration is about flying in the stratosphere. Eurasian integration is just trying to take off, with the attempt being hampered by internal skepticism and external rivalry. Strong institutions, primarily intergovernmental institutions, are what other integration unions, the EAEU included, are lacking the most. This is why the EAEU is periodically thrown into disorder. In 2017, for example, it became clear that certain member countries were actually ready to create risk-prone situations related to their bilateral political and diplomatic problems. But the most disquieting thing is that the EAEU member countries, and Russia is no exception, are proving incapable of meeting all of their commitments under the EAEU Treaty and subsidiary regulation. In a sense, EAEU activities sometimes resemble a growing snowball of unfulfilled commitments and decisions. This sentiment has been expressed by all of the participants in the process and is emerging as a topic for discussion at the political and expert level. And it is certainly being exploited by the EAEU’s external partners that are not averse to promoting their own priorities.      

In a number of cases, like EAEU-EU relations, outside elements are seeking to derail Eurasian integration as such. Even beset by serious crisis, the EU continues to fight any alternative forms of integration in its periphery. In other cases, like relations with China, an external partner is occasionally misled as to the true motives of the EAEU countries and is left wondering to whom it should talk. But generally it has been China that has been exemplary in displaying a positive attitude toward Eurasian integration and has even facilitated its more coherent international positioning by accepting, in 2015, a proposal to draft a basic agreement with the Eurasian Economic Union. The agreement was finalized in October 2017, and it is a major step towards the EAEU acquiring an international identity of its own. Simultaneously, it was a convincing reply to speculation regarding the prospects for China-Russia relations in central Eurasia. These relations are based on cooperation, with the parties’ policies taking into consideration the categories of inclusive prosperity and shared benefit. Those alleging the existence of differences in Central Asia between Russia and China are friends of neither.  

As for the internal situation in the EAEU, the member countries’ failure to live up to their obligations under the treaty has become a harbinger for Eurasian integration. This is similar to the state of affairs in Europe from 1960 to 1970 when participants in the European integration project would violate common market rules and introduce non-tariff barriers obstructing freedom of commerce within the European Economic Community. The solution at that time was found in two mechanisms that can also be considered and applied to Eurasian integration. First, they accepted the so-called “mutual recognition principle,” under which goods conforming to quality standards of one country would automatically be recognized as such in all other EEC countries. This made it possible, albeit at a cost, to remove a considerable number of obstacles and promote market unification. Then, it was up to consumers to choose. Second, all unfulfilled obligations were summed up in the 1985 White Paper on the Completion of the Internal Market drawn up under Sir Arthur Cockfield. The paper contained a list of 297 measures with implementation schedules. Approved by the EEC heads of state and government, it was put into practice in subsequent years with the exception of the issue of state purchases and the levelling of the tax and financial systems.

Russian EAEU chairmanship may well be a convenient pretext for creating a working group representing the governments of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia that could take stock of the unfulfilled obligations and mutual grievances and decide how to deal with them. Let me stress that this is not and cannot be something to be done by the Eurasian Economic Commission, a supranational EAEU institution. It is only the governments appointed by the elected heads of state that can assume responsibility for addressing this important task that is crucial to the survival of Eurasian integration and its continued existence as a tool for implementing national development priorities, the only objective of any integration project. It makes sense to accept this understanding of the substance of integration as central under the current circumstances. It is not the states for integration but integration for the states and the entire EAEU institutional structure should be adjusted to this approach.   

It is fair to say that the Eurasian Economic Commission (EEC), the EAEU’s main executive body, enjoys extremely limited powers and this prevents it from promoting integration properly. In fact, the EEC cannot go beyond simple tariff issues when negotiating with external partners. While modern bilateral and multilateral trade agreements imply a focus on non-tariff restrictions and investment regulation, the EEC is bound by treaty provisions and the EAEU countries’ unwillingness to give it new authority. So it’s no surprise that the EEC heads have been highlighting this problem and have been calling for a resolution.

But a study of the Western European integration experience shows that things are not that simple in this respect either. The countries participating in this years-long process have always cherished their sovereignty. Even now, despite decades of cooperation, EU laws are only approved by the EU Council which includes authorized ministers delegated by the member countries. The European Commission – the EU executive body – cannot adopt a single subsidiary law without their sanction. It is the EU Council that approves the EC’s powers at talks with third countries and watches closely for it to remain within these powers. Therefore, the concern that an increasing number of EAEU issues are being addressed at the Council level rather than the Eurasian Economic Commission reveal insufficient knowledge of European experience.   

The difference is that the Council of the European Union is a permanent working institution with a staff, a history and a mechanism for coordinating positions before a decision is put to vote. There is an institution of member country permanent representatives in Brussels; each representative has a staff and is in permanent contact with their capitals. There are standing committees manned by officials from EU governments. All of this makes it possible to avoid rifts between supranational agencies and the governments and to involve the EU governments in efforts to coordinate positions on each issue. In this respect, Eurasian integration, unlike European, is one-legged, being promoted by the relatively powerful EEC and the powerful supreme decision-making bodies – the Supreme Eurasian Council and the Intergovernmental Council – but lacking anything that would enable governments directly accountable to the heads of state and parliaments to work together on a more or less permanent basis.

It was clear to the initiators of Western European integration in the now remote 1950s that a state is the supreme bearer of sovereign power and that it cannot renounce its sovereignty by virtue of its responsibility to the people. This is why they created conditions for effective intergovernmental cooperation. It is this experience that merits close study and acceptance in order to keep Eurasian integration moving. The disappearance or erosion of the Eurasian project could entail negative consequences for its participants and regional stability as a whole.

The identifying of problems and loose ends in the EAEU can and must be continued. The same refers to the study of best international practices – and the EU is the best source in this sense – to prevent these problems from hurting the integration process. At the present stage, the expert community should draw up an extensive paper on the causes of the current problems in Eurasian integration and on how to move beyond them. The paper must include both economic and purely political and institutional issues and proposals. In the today’s world, integration cannot be purely economic. This will lead to countries distorting it to meet their specific and time-serving interests and thus create long-term risks. To help politicians promote integration in the right direction, it is necessary to clearly formulate what has gone wrong and how to correct it.

Finally, it is important to competently inscribe Eurasian economic integration into the context of Greater Eurasian Partnership. The idea to form this partnership was suggested by Russia and supported by China in the summer of 2016. Ideally, a Greater Eurasian Partnership is a community of countries where the intensity and trusting nature of the relationships between them is qualitatively superior to their relationships with third parties. So far, the world knows only one community of this type, the so-called West, which includes not only the United States, Canada and Europe but also Australia, Japan and, for example, Singapore. The existence of this community is based on unwritten but generally recognized rules of international discourse and implies a plurality of institutions of international cooperation in politics, the economy and culture. Organizations like the SCO, the Regional Comprehensive Economic Partnership (if it materializes), the Silk Road Fund, the Asian Infrastructure Investment Bank, ASEAN, even BRICS and others are intersecting, albeit not rival, organizations. The Eurasian Economic Union, if it becomes a real tool for promoting member country priorities, will take a worthy place within this convention.        

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

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