NO. 9 2018 PUBLISHED BY THE SWEDISH INSTITUTE OF INTERNATIONAL AFFAIRS. WWW.UI.SE Russia and the Eurasian Economic Union: Between Bilateral and Multilateral Relations Irina Busygina & Mikhail Filippov The Eurasian Economic Union (EAEU) in equal status for all members of the Union, was the first relatively successful attempt to when the other member states are much establish strong multilateral institutions for smaller and asymmetrically depend on post-Soviet regional integration. Officially, economic ties with Russia. Overall, it the Eurasian Economic Union was launched remains unclear why Russia has agreed to on 1 January, 2015 with the treaty signed on build a new strong multilateral institution in 29 May, 2014 by the leaders of Russia, the post-Soviet space, as arguably it could Kazakhstan and Belarus. In 2015, Armenia obtain better deals though bilateral bargains and Kyrgyzstan joined the Union. The with much weaker counterparts. EAEU was formed on the basis of the previously functioning Customs Union We argue that Russia, as a rising power and (2010) and the Common Economic Space the strongest in Eurasia, is likely to benefit (2012). The institutions of the EAEU more from bilateral bargains than from include the Eurasian Economic Commis- multilateral arrangements in the region. sion (EEC), a permanent supranational Successful bilateral cooperation body consisting of two representatives from (bargaining) with Russia is also the each member state, the Eurasian preferable choice for Russia’s counterparts Intergovernmental Council, consisting of in the post-Soviet space. The leaders of the prime ministers of member states, the other post-Soviet nations do not trust EAEU Supreme Council, consisting of the Moscow, and are reluctant to delegate heads of state, and the Court of Justice. national sovereignty to integration projects dominated by Russia. The specifics of the Experts see evidence of the Union’s success multilateral compromise adopted for the in the greater scope of supranationalism EAEU grant smaller member states an compared to all previous post-Soviet opportunity to be more successful in integration projects, and in the nature of the bilateral bargains with Russia. Overall, the Union’s multilateral institutions, which are choice of the Russian leadership to build a based on the formal recognition of the equal new strong institutional form of multilateral status of all members of the Union relations (in the form of the EAEU) reduces (Dragneva and Wolczuk 2017: 6–7; Russia’s relative power in the post-Soviet Popescu 2014: 11; Vinokurov 2017). In space. addition, the EAEU successfully negotiates free trade and economic agreements with After the Soviet Union’s collapse, the other countries, including China (Perovic “bilateralization of relations” was the core 2018). principle of Russian foreign policy towards the post-Soviet states and European The institutional design of the Union is neighbors. With the EAEU, the Kremlin has described as an outcome of a series of moved away from the strategy of unexpected compromises (e.g. Czerewacz- bilateralization, while being aware that such Filipowicz and Konopelko 2017). The a union is unlikely to promote Russian question then arises of why the Russian economic and political dominance in the leadership should be interested in expansion region, at least compared to what would be of the Union’s scope of supranationality and attainable through bilateral deals. The 2 creation of the Union was costly for Russia: however, all these projects have been in fact, the other members agreed to enter primarily focused on supporting bilateral the Union on condition of receiving relations between Russia and its substantial concessions from Russia. The counterparts. Overall, at least 29 regional maintenance of the Union requires Russia to organizations have been formed by the post- consent to more compromises and endless Soviet nations, and 14 of them were still economic subsidies. At the same time, the functioning as of 2015 (Gast 2017). post-Soviet countries with EAEU Practically all these projects shared one membership have gained opportunities to distinctive feature: they were centered act more independently from Russia and around Russia and thus provided a very even to “blackmail” Russia with the threat limited level of authority delegation to of leaving the Union. multilateral institutions (Gast 2017). Formal multilateral institutions served as a Why did Russia make such a facade that concealed the true basis of disadvantageous decision? In our view, it regional post-Soviet integration projects— was the Ukrainian crisis of spring 2014 that bilateral relations connecting each of the created incentives for the Russian member countries with Russia. leadership to accept the institutional compromises necessary to initiate the Interestingly, Russia did not even invest Eurasian Economic Union. After the much effort in maintaining this facade. The annexation of Crimea, Putin urgently Russian leadership has repeatedly declared needed another “success story” for the that it considers multilateral cooperation to domestic audience in the face of growing be unacceptably restrictive for Russia as a international isolation and a stagnating “Great Power.” For instance, then-minister economy. This gave the leaders of of defense Sergey Ivanov stated that Russia Kazakhstan and Belarus, the countries with did not want to be tied down in its relations the longest record of participation in with post-Soviet nations by multilateral Russia-centered integration projects in the arrangements (Nezavisimaya Gazeta on 7 post-Soviet space and the founding February, 2001, p. 5, as cited in Nygren members of the EAEU, a chance to exploit 2007: 29). The Strategy for Russia: Agenda the momentum of Russian weakness. Put for the President - 2000i asserted that simply, the Kremlin had to pay a Russian policy towards post-Soviet states considerable price for the opportunity to should be based “on bilateral relations with declare the quick success of the Eurasian a strong position on defending [Russian] Union—a project of significant value for national economic interests…” (Karaganov Russian domestic politics in 2014. et al., 2000: 99). Thus, bilateralism is much more compatible with Russia’s geopolitical Russia’s incentives for bilateral and ambitions than multilateralism. multilateral cooperation in the post- Soviet space Furthermore, the economic rationale for Russia to promote multilateral cooperation Numerous attempts to promote post-Soviet in Eurasia is also doubtful (Tarr 2012; integration have been launched since the Kassenova 2013; Aslund 2016).ii In fact, dissolution of the Soviet Union. In practice, there is no evidence that the EAEU could 3 enlarge Russia’s economic power. As September 2003, Putin and the leaders of Libman (2017: 88–89) argues, “The pooling Ukraine, Belarus, and Kazakhstan signed of economic resources through the EAEU the agreement to form a single economic hardly improves the economic potential of space. The agreement was ratified by all the Russian economy.” On the other hand, four countries in spring 2004. Duma Libman (2017) and Libman and Vinokurov elections were held on 7 December, 2003, (2018) provide evidence that “The EAEU is followed by the presidential elections in associated with an extensive redistribution March 2004. In October 2007, the post- mechanism in favor of smaller countries” Soviet leaders signed the Agreement (Libman 2017: 91) (emphasis added). Establishing an Integrated Customs According to Krickovic (2014: 505), Territory and Formation of a Customs “These states will undoubtedly play an Union. Legislative elections were held on 2 important role in the integration process and December, 2007. Russia will have to appeal to their interests and concerns.” The launching of the Eurasian Union project in fall 2011 was also part of electoral In Russia, foreign policy currently plays an campaigning. In September 2011, Vladimir important instrumental role: it is the main Putin announced that the incumbent tool for domestic consensus and President Medvedev would not run for re- mobilization (Busygina 2018), and so the election, allowing him (Putin) to again re-integration of the post-Soviet space was occupy presidential office. Two weeks and is an important element of Russian later, Putin declared that during his next domestic politics. According to Gleb term as president he would bring ex-Soviet Pavlovsky, a former adviser to Putin and states into a “Eurasian Union.” The leaders currently the head of a political think tank, of Belarus and Kazakhstan promptly voiced every Russian national election campaign their support for the Union; Russian media since 1996 has been accompanied by reported that leaders of some other post- declarations of intentions to significantly Soviet nations also expressed interest in the push forward the re-integration of the post- idea. One month later, on 18 November, Soviet space (cited in Halbach 2012). The 2011, the presidents of Belarus, electoral campaign promises were often Kazakhstan, and Russia signed a supplemented by specific steps aimed to declaration setting the target of establishing show voters yet another success of post- the “Eurasian Economic Union” by January Soviet re-integration. For instance, in 1996, 1, 2015. three months before the presidential elections in Russia, Boris Yeltsin and the In 2011, most experts did not expect the leaders of Belarus, Kazakhstan and the Eurasian Union project to result in any Kyrgyz Republic signed the