EURASIAN INTEGRATION: EFFECTS ON CENTRAL ASIA

VLADIMIR FEDORENKO

750 First St., NE, Suite 1125 Washington, DC 20002 [email protected] Phone: 202.660.4333 www.rethinkinstitute.org RETHINK PAPER 23 SEPTEMBER 2015

EURASIAN INTEGRATION: EFFECTS ON CENTRAL ASIA

VLADIMIR FEDORENKO

RETHINK PAPER 23 September 2015

Rethink Institute is an independent, not-for-profit, nonpartisan research institution devoted to deepen our understanding of contemporary political and cultural challenges facing communities and societies around the world, in realizing peace and justice, broadly defined. The Institute pursues this mission by facilitating research on public policies and civic initiatives centering on dispute resolution, peace building, dialogue development, and education. Toward these goals, the Institute sponsors rigorous research and analysis, supports visiting scholar programs, and organizes workshops and conferences. © Rethink Institute. All rights reserved ISBN: 978-1-938300-32-5 Printed in the USA Rethink Institute 750 First St., NE, Suite 1125 Washington, DC 20002 Phone: 202.660.4333 [email protected]

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CONTENTS

1 Summary

3 Introduction

3 History of Eurasian Integration

5 Stages of Eurasian Integration: From CIS to EAEU

6 Eurasian Economic Union

7 Kazakhstan

9 Kyrgyzstan: Abandoning a multilateral policy?

12 Tajikistan: Next in Line?

15 Uzbekistan

15 Turkmenistan

16 Regional Factors

16 Security

17 Political Implications and Practicality

18 The Role of Media

19 Conclusion: Duality in Eurasian Integration

22 About the Author

Eurasian Integration: Effects on Central Asia 1

Summary Rapidly growing Eurasian integration has become one of the most interesting developments in the post-Soviet region due to its economic and geopolitical dimensions. A Russian-led Eurasian integration process, which has included Armenia, Belarus, Kazakhstan and Kyrgyzstan so far, aims to establish a mechanism of intergovernmental cooperation focusing predominantly on economic partnership. With the establishment of supranational institutions in collaboration with the post-Soviet republics, Russia aims to reestablish its influence, foster economic ties and strengthen trade relationships in the region. While some experts see Eurasian integration as an important historical development, others are completely skeptical about its effectiveness and even longevity. While the progress of Eurasian integration is predominantly based on economic dimensions, it also inevitably features social, political, and security dimensions. This study aims to elaborate on the effects of Eurasian integration on the Central Asian countries. For the land-locked economies of the Central Asian republics, regional economic cooperation and trade constitute an essential factor of sustainable growth. Therefore, any regional or international establishments like the Eurasian Economic Union that promote international trade and facilitate movement of goods, capital, labor and services between member states would be welcomed. If properly implemented, intra-union cooperation could strengthen local business and make them more competitive in global markets, attract foreign investments, strengthen the middle class, and eventually liberalize the economy. It could also facilitate adopting resolutions for a number of regional dilemmas such as border delimitation disputes, enclave problems in the Fergana Valley and transboundary water cooperation. However, there is concern that the initial purpose of Eurasian integration could shift from interstate cooperation toward the creation of a more intrusive supranational structure. Especially after the annexation of Crimea, the Ukrainian crisis and Western sanctions, Russia has adopted more aggressive and persistent behavior that could damage trust among the members of the Eurasian Economic Union. In fact, Astana feels the necessity of making periodic announcement that Kazakhstan does not seek and will not accept any political integration or supranational structure. If mechanisms for equality and regulation become instruments of political and economic pressure, the Economic Union will lose its attractiveness as a union that could otherwise be mutually beneficial for all member countries.

2 Vladimir Fedorenko

Eurasian Integration: Effects on Central Asia 3

Introduction Rapidly growing Eurasian integration has become one of the most interesting developments in the post-Soviet region due to its economic and geopolitical dimensions. A Russian-led Eurasian integration process, which has included Armenia, Belarus, Kazakhstan and Kyrgyzstan so far, aims to establish a mechanism of intergovernmental cooperation focusing predominantly on economic partnership. With the establishment of supranational institutions in collaboration with the post-Soviet republics, Russia aims to reestablish its influence, foster economic ties and strengthen trade relationships in the region. While some experts see Eurasian integration as an important historical development, others are completely skeptical about its effectiveness and even longevity. Eurasian integration has been perceived differently internationally. The United States sees Russian-led integration as the Kremlin’s imperial ambition to ‘re-Sovietize’ some of the former Soviet states by creating supranational structures that would eventually take control over not only economic issues but also political decision-making mechanisms. In 2012, former U.S. secretary of state Hillary Clinton said, “We know what the goal is and we are trying to figure out effective ways to slow down or prevent it [Eurasian Union].”1 China, another interested state, interprets Eurasian integration as Moscow’s instrument for increasing Russian competitiveness in trade and securing access to Central Asia by setting up structural barriers to hinder Chinese competitiveness. While the progress of Eurasian integration is predominantly based on economic dimensions, it also inevitably features social, political, and security dimensions. This study aims to elaborate on the effects of Eurasian integration on the Central Asian countries.

History of Eurasian Integration To create intergovernmental partnership among post-Soviet states, Russia needed a new ideology that could provide fresh momentum and keep new members together. In the early 1990s the Yeltsin administration failed to implement Western democracy and liberal values, while shock therapy did not result in the desired outcomes. Unwilling to continue a Western path of development, Russia did not want to return to the Soviet experience, either. This led to disappointment and the need to forge a new ideology of regional development. This created favorable conditions for the development of Neo-Eurasianism and acceptance of this doctrine as a national ideology. Ideas about Russia’s uniqueness and belonging to neither Europe nor Asia were common during Imperial Russia. Prominent Russian philosopher Petr Chaadaev (1794 - 1856) said, “We do not belong to any of the great families of the human race; we are neither of the West nor of the East, and we don’t have the traditions of either.”2 Such ideas and ways of thinking were inspirational in rethinking and redefining Russia’s role and identity.

1 Clover, Charles. “Clinton Vows to Thwart New Soviet Union,” December 6, 2012. http://www.ft.com/cms/s/0/a5b15b14-3fcf-11e2-9f71-00144feabdc0.html#axzz3iHp5ES94. 2 Marlene Laruelle, Russian Eurasianism: An Ideology of Empire (Baltimore: The John Hopkins University Press, 2012) p. 3. 4 Vladimir Fedorenko

Classical Eurasianism as an ideology developed in the early 20th century among Russian émigrés and later continued under the Soviet regime. The key concept of Eurasianism is based on Russia’s unique position at the confluence of various regional cultures and identities, such as Slavic, Turkic, Islamic, Turanian and Arian. According to classical Eurasianism, the Eurasian identity was based more on Asian than Western characteristics. Moreover, Eurasianism sees Russia positioned at the center, rejecting the perception of Russia as being on the periphery of Europe.3 Nikolai Trubetzkoy, Petr Savitsky and Lev Gumilev were the most influential thinkers in the discourses of Eurasianism. While Gumilev didn’t identify himself as a Eurasianist, he was perceived and often described as a Eurasianist in the Russian media. For example, Gumilev declared, “I agree with the main historical and methodological conclusions of Eurasianists. But they had no knowledge of the key element in the theory of ethnogenesis: the concept of passionarity4. They lacked a background in natural science.”5 Moreover, Gumilev’s approach was also based more on the principal of ethnic essences, while classic Eurasianism was attached to “geographic ideology,” believing that territory gives meaning to national identity.6 Various references and understanding of the key elements forming Eurasia, such as language, ethnicity and territory, enabled formation of the discourses and interpretation of Eurasian identity and inclusive in-group affiliation. Neo-Eurasianism originated in the 1990s and slowly gained popularity because it could fill the ideological vacuum in Russian foreign policy. The Neo-Eurasian school of thought considers Russia to be closer to Asia than to Europe. Aleksandr Panarin and Alexander Dugin are among the most prominent scholars who promoted Neo-Eurasianism as the only way for Russia to reclaim its international significance and strength. Dugin believes that there is a clash between Eurasian civilization, led by Russia, and “Atlantic” civilization; therefore, Russia has to maintain its military strength, forge strategic alliances and create an independent economy. Dugin envisions Russia’s future: “It is not feasible for Russia to remain a small state; even influence over the post-Soviet territories is not enough for the survival of Russia. Survival of Russia is only possible in the form of empire... It is about creation of certain supranational forms for Russia’s existence and the Russian mission to spread its own way of governance over the region.”7 Furthermore, Dugin is also well known for his radical statements; he said: “We should shoot and kill for our country, for Russia, for truth, for social justice, for ideas, for people and the right political opinions. Truth and benevolence demand that we be decisive and brave. Our enemies – Russia’s enemies – ‘Atlantism,’

3 Ibid, p. 2. 4 Passionarity is often used by Lev Gumilev to explain the collective behavior of ethnic groups. Passionarity refers to stages of development when ethnic groups have ultimate goals that motivate them and lead to extraordinary activities through a powerful inspiration to sacrifice everything for the sake of achieving the goal. 5 Ibid, p. 58. 6 Ibid, p. 59. 7 “Aleksandr Dugin: V Koltse Vragov (Aleksander Dugin: In a Circle of Enemies),” Mezhdunarodnoe Narodnoe Dvizhenie (International Eurasian Movement), January 14, 2005, http://evrazia.info/article/2161. Eurasian Integration: Effects on Central Asia 5

globalism, and oligarchic liberalism, should be destroyed without mercy, otherwise they will destroy us.”8 As a result, there are various ideas and practical interpretations of Eurasian integration, ranging from liberal regulation and inclusive mechanisms of interstate cooperation to more conflict-driven actions demanding more conservative forms of collaboration. Various inputs from classical Eurasianist and Neo-Eurasianist ideologies have served as catalysts and guidelines for the creation of various mechanisms of intergovernmental integration, such as the Eurasian Customs Union (EACU) and later the Eurasian Economic Union (EAEU). The process of integration produced a number of initiatives and institutions, and Central Asian republics had to closely monitor regional developments and, in the light of national interest, choose whether to be in the vanguard of integration or remain observers. Russian-led Eurasian integration has not shown a straightforward path of development, but instead has been a combination of various initiatives that have experienced highs and lows. These initiatives had their own missions and goals, so they were able to attract Central Asian states with varied success.

Stages of Eurasian Integration: From CIS to EAEU In order to understand the scope and effectiveness of the Eurasian Economic Union, which is the highest level of Eurasian integration, it is crucial to comprehend the preceding institutions and economic initiatives. Therefore, this study provides a brief overview of the milestones of Eurasian development. After the collapse of the Soviet Union, various attempts to reintegrate post-Soviet states were implemented. The first step was the formation of the Commonwealth of Independent States (CIS), which was established on December 8, 1991 9 . The Commonwealth was viewed more as an ad hoc political arrangement than an organization that could promote further cooperation or future integration. In 1993 Russia suggested establishment of the Economic Union, which was partially based on the European Union model. Nursultan Nazarbayev, president of Kazakhstan, was the first to suggest the creation of an interstate structure to facilitate regional trade and economic cooperation, in remarks made during a speech at Moscow State University (MSU) in 1994. He said, “20 years ago, here at MSU, I for the first time proposed the idea of establishing a new integration process – the Eurasian Economic Union. I was, and still am, a strong believer that Eurasian integration is possible only if it is based on the principles of voluntariness, equality, reciprocity and consideration of the practical interests of each member state. This suggestion became the inception of the process

8 Aleksander Dugin, Esli by my pobedili v 1993 godu, ya byl by schastliv (If we had won in 1993, I would have been happy), October 3, 2003, http://www.evrazia.org/modules.php?name=News&file=article&sid=1475. 9 Rilka Dragneva and Kataryna Wolczuk, “Russia, the Eurasian Customs Union and the EU: Cooperation, Stagnation or Rivalry?” (Chatham House, August 2012), http://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Russia%20and%20Eurasia/ 0812bp_dragnevawolczuk.pdf, p.3. 6 Vladimir Fedorenko

currently called Eurasian integration.”1011 However, these attempts were more declaratory than action-based and did not receive proper attention from the Russian government at that time. It was only in 2000 that Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Belarus experienced a tangible outcome by establishing the Eurasian Economic Community, which aimed to promote economic cooperation among the members (Uzbekistan joined later, on January, 25, 2006 and withdrew in 2008). The major reason for the establishment of the Eurasian Economic Community was to facilitate the creation of the Eurasian Customs Union and the Common Economic Space. The Customs Union of Belarus, Kazakhstan and Russia was officially established on January 1, 2010. The Customs Union was seen as an initial attempt toward establishment of a single economic space that could further promote integration, in some ways resembling the model of the European Union. The agreement to establish the Eurasian Economic Union by 2015 was signed on November 18, 2011 by Belarus, Kazakhstan and Russia. In 2012 the three countries set up the Common Economic Space by signing an agreement that aimed to create efficient operation of a single market for goods and services; they also established the Eurasian Economic Commission, a regulatory body ensuring effective functioning of the Common Economic Space, the Eurasian Customs Union and the Eurasian Economic Union. On May 29, 2014 the presidents of Belarus, Kazakhstan and Russia signed the treaty for the Eurasian Economic Union, which came into force on January 1, 2015. The presidents of Armenia and Kyrgyzstan participated in the signing ceremony as observers and became members of the treaty later: Armenia on October, 10, 2014 and Kyrgyzstan on December 23, 2014. During the signing ceremony, President Vladimir Putin stated: “Today we are creating a powerful, attractive center of economic development, a big regional market that unites more than 170 million people.”12

Eurasian Economic Union The Eurasian Economic Union offers positive economic developments such as free movement of capital, products, labor and services; standardized rules for conducting trade and business; non-tariff trade relationships; restructuring intra-union communication routes; improved transportation; unification of the energy system;

10 “Prezident Kazahstana N.Nazarbayev vystupil v MGU s lektsiyey ob evraziyskoy integratsii (President of Kazakhstan N.Nazarbayev presented lecture about Eurasian Integration),” Ispolnitelnyi Komitet SNG (CIS Executive Committee), April 28, 2014, http://www.cis.minsk.by/news.php?id=3078. 11 “Vystuplenie Prezidenta Respubliki Kazahstan N.A. Nazarbayeva v Moskovskom Gosudarstvennom Universitete Imeni M.V.Lomonosova (Speech of President Nazarbayev at Moscow State University),” Official Site of President of Kazakhstan Republic, accessed July 5, 2015, http://www.akorda.kz/ru/page/page_216601_vystuplenie-prezidenta-respubliki-kazakhstan-n-a- nazarbaeva-v-moskovskom-gosudarstvennom-universit. 12 Neil MacFarquhar, “Russia and 2 Neighbors Form Economic Union That Has a Ukraine-Size Hole,” The New York Times, May 29, 2014, http://www.nytimes.com/2014/05/30/world/europe/putin-signs- economic-alliance-with-presidents-of-kazakhstan-and-belarus.html?_r=2. Eurasian Integration: Effects on Central Asia 7

collaborative efforts against drugs and human-trafficking; coordination of the national legal systems; and many others. The statistics of the Eurasian Economic Union are as follows: a market of 182.1 million people with over 20 million km2 of total territory; Number 1 in global oil production (607.5 million tons per year – 14.6 % of global oil production); Number 1 in global natural gas production (701.2 bcm per year – 20.9 % of global natural gas production); Number 3 in global electricity production (1183.2 billion kWh – 11.2 % of global production); Number 5 in global steel production (74.8 million tons – 5.4 % of global production); and 106,600 km of railroad connections (Number 2 in the world). The GDP of EAEU members for 2013 was $2,411 billion (3.7% of global GDP).13 Customs Union statistics are economically appealing; however, in terms of competitiveness, it would be difficult for Central Asian companies to fully benefit from common market shares. The level of economic development among members varies drastically; for instance, Russia’s GDP for 2013 was $2,096 billion compared with Kazakhstan’s $231.8 billion (9 times more), Kyrgyzstan’s $7.2 billion (290 times more) and Tajikistan $8.5 billion (246 times more).14 Economic and geopolitical gains for Russia are obvious, and Russia has nothing to lose from close collaboration and integration with Central Asian republics. In spite of tangible economic gains, the opportunity cost of Central Asia’s integration with Russia in the Customs Union is the inability to further engage in close cooperation with other players.

Table 1: Comparable Gross Domestic Products of Eurasian Union Members (2013)

World Country U.S. Dollars In Comparison Ranking to Russia's GDP, times 9 Russian Federation 2,079.6 billion 1 46 Kazakhstan 231.8 billion 9 68 Belarus 71.7 billion 29 133 Armenia 10.4 billion 201 136 Tajikistan (candidate) 8.5 billion 246 143 Kyrgyz Republic 7.2 billion 290

Kazakhstan Kazakhstan’s role in the Eurasian integration process is instrumental and differs from the rest of the Central Asian states. Being a strong supporter and co-founder of Eurasian

13 “About the Eurasian Economic Union,” accessed June 20, 2015, http://www.eaeunion.org/#about. 14 “GDP Ranking,” World Bank, July 1, 2015, http://data.worldbank.org/data-catalog/GDP-ranking- table. 8 Vladimir Fedorenko

Economic Union, Kazakhstan plays an exceptional role in the development and advancement of integration due to its strategic geographic location, rapidly developing economy and advanced transportation routes. Customs Union membership offers a number of benefits to Kazakhstan. The most substantial benefit is removal of tariffs and barriers, which introduces more efficient, convenient and profitable trade opportunities with Russia and other Customs Union members. During the discussion program “What to do? Will the Eurasian Union be created?” (“Chto delat? Budet li sozdan Evraziyskiy Soyuz?”), broadcast on Russian TV in March 2003, Nursultan Nazarbayev said, “We sell wheat to Belarus and they sell us their tractors. But the price of wheat increases from $4 to $14 when it arrives in Belarus through Russian territory, so the mutual trade becomes absolutely unprofitable.” Astana hopes that removal of tariffs will result in improvement of trade relationships between Kazakhstan and other Economic Union members. Energy is the essential linchpin that strengthens integration bonds and builds long-lasting business relationships among partners. The treaty on the Customs Union reinforced the commitment of member countries to engage in coordinated energy policies and establishment of common energy markets on the basis of common principles. The treaty suggests that this goal be accomplished in several stages and be completed by 2025. As such, a common electric energy market would be completed by 2019, while a common hydrocarbons market would be established by 2025. Kazakhstan has significant energy resources of 30 billion barrels of proven oil reserves (12th in the world) and 45.7 trillion cubic feet of proven natural gas reserves (22nd in the world). Therefore, Kazakhstan is not only energy-sufficient, but also one of the major energy exporters in the world.15 In the 1990s Kazakhstan traded its energy resources mainly to Russia through energy corridors on Russian territory inherited as a Soviet legacy. Unwilling to rely solely on cooperation with Russia, Kazakhstan was able to diversify its energy market by adding China via the Kazakhstan–China oil pipeline (final stage was completed in 2009) to the traditional Russian energy corridors of the Caspian Pipeline Consortium and the Atyrau-Samara oil pipelines. Notwithstanding positive GDP indicators, in comparison with the other two members, Belarus and Russia, Kazakhstan has benefited the least trade-wise from Eurasian integration.16 The reason that Kazakhstan has suffered this comparative disadvantage stems from relying extensively on the extractive economy and poor revenue diversification from other sectors. Kazakhstan’s economy depends heavily on oil revenues, which constitute 60% of the state's budget and 33% of the GDP. Thus, it has been extremely difficult for Astana to find markets in oil-abundant Russia.17 Kazakhstan has the strongest economy in Central Asia, but in comparison with Russian economy, it is considerably smaller and less diversified.

15 Harrison Jacobs, “The 17 Countries Sitting On The Most Valuable Energy Reserves,” Business Insider, February 13, 2014, http://www.businessinsider.com/countries-with-most-energy-reserves- 2014-2#ixzz3iL0bYmNA. 16 Gulaikhan Kubayeva, “Economic Impact of The Eurasian Economic Union on Central Asia” (Policy Brief, Bishkek, February 2015), http://www.osce-academy.net/upload/file/Policy_Brief_20.pdf. 17 Stratfor, “When Oil Prices Drop, Some Countries Lose” (Stratfor Global Intelligence, November 4, 2015), https://www.stratfor.com/analysis/when-oil-prices-drop-some-countries-lose. Eurasian Integration: Effects on Central Asia 9

On July 27, 2015 Kazakhstan completed a 20-year marathon to become a member of World Trade Organization (WTO). According to agreements signed by the founding members of Eurasian Customs Union (Belarus, Kazakhstan and Russia) on May 19, 2011, all trade regulations with WTO members should be conducted in conformity with and in the context of the WTO. 18 On May 29, 2014 during a meeting of Eurasian Economic Council, Putin said, “I would like to particularly emphasize the fact that the Eurasian Economic Union will be based on universal and transparent principles that will be clear for all. Likewise it is to be based on the norms and principles of the WTO.” 19 The Kazakh parliament plans to ratify the WTO accession agreement in October 2015. It is interesting how Kazakhstan and Economic Union are going to resolve the difference in tariff policies of the WTO and the Union. According to Russia’s WTO agreement, the average weighted tariff should decrease from 10.9% to 7.9% only by 2020, while Kazakhstan’s WTO agreement stipulates a decrease of the average weighted tariff to 6.1 % in 2015 upon becoming a full-fledged member.20

Kyrgyzstan: Abandoning a multilateral policy? Kyrgyzstan joined the Eurasian Economic Union on May 21, 2015. At the ceremony of accession, Kyrgyz President Atambayev declared: “One of the world’s largest economic unions fully meets Kyrgyzstan’s national interests21.” The assistance package offered by Russia to Kyrgyzstan for becoming a member included establishment of a joint Russian- Kyrgyz Fund of Development with a budget of $1 billion; assistance with construction of the Upper Naryn Cascade HPP; providing $200 million to finance Kyrgyz border checkpoints; and the Gazprom deal, which enabled Kyrgyzstan to alleviate issues related to gas shortages22. Also, Russia offered other, less significant deals, which helped Kyrgyzstan solve some of its social issues. The Russian-Kyrgyz Fund was established in November 2014 with the aim of modernization of the Kyrgyz economy, which needed substantial investments to adapt to the conditions of the Union. Five hundred million dollar of the budget was to be

18 Dogovor Ot 19 Maya 2011 Goda O Funktsionirovanii Tamozhennogo Soyuza v Ramkah Mnogostoronney Torgovoy Sistemy (19 May 2011 Agreement about Functioning of Customs Union in Framework of Multilateral Trade System), 2011, http://www.eurasiancommission.org/ru/act/trade/dotp/SiteAssets/wto/freddy-rus.pdf. 19 Nachalo Zasedaniya Vysshego Evraziyskogo Ekonomicheskogo soveta v uzkom sostave (The Beginning of session of Upper Chamber of Eurasian Economic Union), 2015, http://www.kremlin.ru/events/president/transcripts/45788. 20 Aitolkyn Kourmanova, “Kazakhstan and the WTO: A New Era,” CSIS, July 2, 2015, http://csis.org/publication/kazakhstan-and-wto-new-era. 21 Putz, Catherine. Kyrgyzstan (Finally) Joins the Eurasian Economic Union. May 2015. [Accessed July 31, 2015 at http://thediplomat.com/2015/05/kyrgyzstan-finally-joins-the-eurasian-economic-union/] 22 Kirill Sokolov, “‘Dengi Dolzhny Rabotat’: Komu I Kak Pomogaet Rossiya v Ramkah EAES (‘Money Should Work’: Who and How Russia Helps in Framework of EAEU.,” Ritm Evrazii (Rythm of Eurasia), July 17, 2015, http://www.ritmeurasia.org/news--2015-07-17--dengi-dolzhny-rabotat-komu-i-kak- pomogaet-rossija-v-ramkah-eaes-18838. 10 Vladimir Fedorenko

apportioned from the Russian budget and transferred to the Fund in 2015-2016, while the other $500 million was to be delivered by Russia as loans23.

Table 2. Percentage of Energy Distribution by Sector in Central Asia (%)24

Gas Oil Coal Hydro Total Kazakhstan 16 50 33 1 100 Kyrgyzstan 2 5 11 82 100 Tajikistan 2 1 1 96 100 Turkmenistan 83 17 0 0 100 Uzbekistan 84 13 2 1 100 Total 48 33 17 2 100

Table 3. Hydroelectric Potential of Central Asian Water Basins25 Countries HPP Electricity Economic Utilization Percentage of Installed production at hydro of hydro the hydro capacity, HPP (2005), potential, potential, potential of the MW billion kWh billion per cent, % CAR, % kWh/y Kazakhstan 2,248 7.9 27 29 6 Kyrgyzstan 2,910 14 99 14 22 Tajikistan 4,037 17.1 317 6 69 Turkmenistan 1 0 2 0 0 Uzbekistan 1,420 6 15 49 3 Total 10,616 45 460 10 100

Kyrgyzstan does not have substantial hydrocarbon resources, but has significant hydroelectric potential, of which only about 14% is used (Table 2). Russia has made substantial investments in the hydroelectric sector of Kyrgyzstan, such as investment in the construction and operation of Kambarata-1 Dam and financing of the Upper Naryn HPP cascade, which should enable Kyrgyzstan to produce an additional 6 billion kW/h of hydroelectric energy annually. These projects are expected not only to solve Kyrgyzstan’s energy shortage issues, but also transform Kyrgyzstan into an energy exporter. Moreover, on April 10, 2014, Russian energy giant Gazprom took over KyrgyzGaz, Kyrgyzstan's only state-owned natural gas corporation, for the symbolic price of $1, with

23 Ibid

24 Vladimir Fedorenko, “Prospects for Water Cooperation in Central Asia,” Paper (Washington DC: Rethink Institute, February 14, 2014), http://www.rethinkinstitute.org/wp- con0tent/uploads/2014/02/Fedorenko-Prospect-of-Water-Coop.pdf, p. 9. 25 Ibid, p. 8. Eurasian Integration: Effects on Central Asia 11

$40 million of previous debt to become Gazprom's responsibility.26 With these energy deals, Russia secured a considerable amount of control over the Kyrgyz national energy supply. Another reason for Kyrgyzstan’s membership in the Economic Union is Kyrgyz the presence of migrant workers in Russia and Kazakhstan; their remittances make up about 36% of the Kyrgyzstan GDP27. At the signing ceremony, Atambayev said, "It will be much easier and simpler for our citizens who are migrant workers in Russia and Kazakhstan to live and work there. These 600,000 people have parents and children. This way, we will immediately solve the problems of nearly 3 million Kyrgyz citizens, or half the country's population.28" However, Kyrgyzstan does not view membership in Economic Union as the solution to all problems. Even pro-Eurasian government officials such as Temir Sariyev, prime minister of Kyrgyzstan, admit that there might be problems: “For Kyrgyzstan, joining the Eurasian Economic Union is an opportunity to reach a wider market. Eurasian Economic Union policy aims to support domestic producers. We have never said that everything will be fine after joining the union. Of course, there will be difficulties. After the accession there will be a lot of competition. We have said and continue to say to businessmen: It is necessary to prepare. There will be competition. Hence, it is necessary to produce a quality product. With regard to technical regulations and safety certificates, any state must and will comply with the requirements.”29 Ideally, such regulations would increase quality and money inflow to the national budget; however, in the short run, hasty implementation of these regulations would be counterproductive. It is expected that accession to the Economic Union will considerably impact the small and mid-size businesses that are the main pillars of the Kyrgyz economy and livelihood. Needless to say, a significant portion of such transactions is either partially registered or not registered at all. For instance, the famous Dordoy Bazaar, a gigantic wholesale and retail market located near Bishkek, has become one of the main trading hubs for re- export of international products, predominantly Chinese and Turkish. A majority of the trade transactions and exchanges of goods and services are done on a laissez faire basis, under the supervision of local administrative agencies, with little or no direct involvement of official government authorities. Small and mid-size businesses are flourishing because of lack of excessive bureaucracy regulating trade relationships. According to many businessmen and enterprises, rapid introduction of obligatory norms and regulations will have significant effects on trade volumes, product supplies and overall price levels of commodities. For large companies, compliance with new regulations could still be profitable due to trade volume, but many small-scale companies could seriously suffer as a consequence of Economic Union membership.

26 “Gazprom Buys Kyrgyzgaz for $1 Plus Debt,” Moscow Times, April 10, 2015, http://www.themoscowtimes.com/business/article/gazprom-buys-kyrgyzgaz-for-1-plus- debt/497858.html. 27 David Trilling, “Central Asia: The Drop in Remittances from Russia Is Bad. But How Bad?,” Eurasianet, March 27, 2015, http://www.eurasianet.org/node/72751. 28 RFE/RL’s Kyrgyz Service, “Kyrgyzstan Joins Eurasian Economic Union,” May 21, 2015, http://www.rferl.org/content/kyrgyzstan-joins-eeu-russia/27028862.html. 29 Tatyana Kudryavtseva, “Kyrgyzstan: Half an Hour before Eurasian Economic Union,” 24.kg News Agency, April 27, 2015, http://www.eng.24.kg/economics/175494-news24.html. 12 Vladimir Fedorenko

According to Economic Union conditions, high tariffs are to be placed on trade with non- member states. This will significantly affect Kyrgyzstan’s southern provinces, which are heavily dependent on trade with Tajikistan and Uzbekistan. Another significant portion of the Kyrgyz population, who get income through resale of cheap Chinese merchandise, will also be affected (the main Kyrgyz import partner is China with 55.9% of total annual imports in 201330). According to reports, Russia and Kazakhstan have pledged to provide $300 million to alleviate the negative consequences of the transition period for Kyrgyzstan.31 Another issue is that Kyrgyzstan has been a full-fledged member of the WTO since 1998, so it has to realign WTO duties in accordance with Economic Union duties; however, in many cases this realignment may violate commitments made to the WTO.32 The Kremlin’s influence over Bishkek has grown tremendously in the last five years, and as a result, a reluctant Kyrgyzstan agreed to join the Economic Union in an unexpectedly hasty and unbalanced way. Alexei Malashenko, a Central Asian scholar and chair of the Carnegie Moscow Center, said, “To my mind, Kyrgyzstan is more controlled by Moscow than other Central Asian states. [And President Almazbek Atambayev] sees no alternative to a Russian economic and political presence.”33 Another example is the Human Rights Defender Award given to political activist Azimzhan Askarov by the U.S. State Department, which offended Kyrgyz authorities and strained the U.S.-Kyrgyz relationship. In response, the Kyrgyz government denounced the bilateral cooperation agreement with the United States signed in 1993. Many experts find the Kyrgyz government response to be and overreaction. For example, Zamira Sydykova, the former ambassador of the Kyrgyz Republic in the United States, commented, “It sounds strange that Kyrgyzstan broke off relations with the United States. Of course, this is not an independent decision of Prime Minister Temir Sariev. The decision was preceded by consultation with Russia.”34 With closure of the U.S. Manas Air Base and the opening of a Russian military base in Kant, it seems like Kyrgyzstan is diverging from its traditional multi-vector international policy and moving toward a close alliance with Russia. Apparently, Bishkek relies extensively on Russian financial support and Moscow’s reassurance of the current government’s political longevity and social stability the country.

30 The World Factbook, “Central Asia: Kyrgyzstan” (CIA), accessed May 9, 2015, https://www.cia.gov/library/publications/the-world-factbook/geos/kg.html. 31 Ryskeldi Satke, “Kyrgyzstan and the Eurasian Economic Union: The View from Bishkek,” European Council on Foreign Relations, May 9, 2015, http://www.ecfr.eu/article/commentary_kyrgyzstan_and_the_eurasian_economic_union_the_view _from_bis3022. 32 European Bank for Reconstruction and Development, “Integration Across Borders,” Transition Report 2012, Chapter 4, accessed July 30, 2015, http://www.ebrd.com/downloads/research/transition/tr12d.pdf. 33 Stephanie Ott, “Russia tightens control over Kyrgyzstan”, September 18, 2014 http://www.theguardian.com/world/2014/sep/18/russia-tightens-control-over-kyrgyzstan 34 Tatyana Kudryavtseva, “Very expensive Azimzhan Askarov,” July 23, 2015. http://www.eng.24.kg/perekrestok/176514-news24.html. Eurasian Integration: Effects on Central Asia 13

Tajikistan: Next in Line? The next potential member of the Economic Union – Tajikistan – is attentively watching the ongoing integration progress of Kyrgyzstan. Tajikistan’s membership in the Union depends on Kyrgyzstan’s accession, because Tajikistan lacks mutual borders with Union member states. Similarly, Tajikistan’s accession to the Union has a number of benefits and challenges. Tajikistan is one of the most remittance-dependent countries in the world; remittances that enter from 1.5 million migrant workers predominantly employed in Russia35 make up about half of the country’s GDP36. Therefore, the most visible and practical benefit of Tajikistan’s membership in the Union would be alleviation of living and working conditions for its migrant workers in Russia. Many immigrant workers and their family members would approve Union membership for obvious practical reasons, such as work authorization, social benefits, education opportunities and medical services throughout all member state territories. It is interesting that Russian public opinion is not enthusiastic about Tajikistan’s membership in the Union. According to a survey implemented by the Russia Public Opinion Research Center WCIOM, in June 2014 only 14% of Russians said they would like to see Tajikistan as the next member of the Eurasian Economic Union.37 Removal of trade barriers and access to the market of the entire Union is often portrayed as a significant economic advantage for new members. However, the economic situation in Tajikistan and the strength of local businesses means that the country is not strong enough to withstand intra-union competition. Therefore, one of the important consequences of potential Economic Union membership would be increased Russian exports and product expansion to Tajikistan. On the one hand, the availability of below- domestic-price products is a positive development for end customers, yet poor competitiveness of local companies and limitations on supply routes due to increased trade tariffs with non-union states could damage the strength and independence of the Tajik economy. Also, Tajikistan, which has been a member of the WTO since March 2013, would have to readjust its trade tariffs should it become a member of the Union. Thirty- six percent of Tajikistan tariff rates coincide with Economic Union rates; however, Tajikistan would have to realign the rest, since 30% of Union tariff rates are higher and 34% are lower.38 Another important issue concerning accession to the Economic Union relates to the energy sector. Tajikistan has a modest amount of proven hydrocarbon resources. And although Tajikistan possesses significant hydroelectric potential, it often experiences

35 “Tajiks Face New Obstacles to Work in Russia,” Institute for Peace and War Reporting, January 23, 2015, https://iwpr.net/global-voices/tajiks-face-new-obstacles-work-russia. 36 Farrukh Umari, “Tajik Migrants in Russia: Life Is a Queue and Then You Die,” Global Voices, April 8, 2014, http://globalvoicesonline.org/2015/04/08/tajik-migrants-in-russia-life-is-a-queue-and-then-you- die/. 37 “Rossiyane O Sozdanii Evraziyskogo Ekonomicheskogo Soyuza (Russians about Creation of Eurasian Economic Union),” Press-Release (WCIOM, July 3, 2014), http://wciom.ru/index.php?id=236&uid=114883. 38 “Otsenka Economicheskogo Effekta Prisoedineniya Respubliki Tadjikistan k TS i EEP (Evaluation of Economic Effect of Membership of Tajikistan in CU and EES)” (Eurasian Bank of Development, 2013), http://www.eabr.org/general//upload/CII%20-%20izdania/Proekti%20i%20dokladi/Tadjikistan- CU-SES/EBD_Centre_Doklad_14_RUS_1.pdf. 14 Vladimir Fedorenko

energy shortages. Tajikistan utilizes only about 6% of its hydroelectric potential (Table 2). Russia has made substantial investments in the Tajikistan energy sector. For example, 75% of the ownership of Sangtuda-1, one of largest HPPs in Tajikistan, belongs to the Russian Federation and 25% to the Republic of Tajikistan.39 In addition, if Tajikistan enters the Economic Union, it will significantly benefit from low oil prices and non-tariff imports of energy products from Kazakhstan and Russia. Import of cheap energy products would provide a rapid solution of domestic energy demands. However, availability of cheap oil and natural gas could discourage investors and stakeholders from investing in various alternative renewable technologies. For instance, construction of the gigantic hydroelectric Rogun Dam requires considerable financial investments, but due to the prolonged return on investments and the availability of cheap hydrocarbons, construction of Rogun Dam could be hindered or postponed under conditions of Economic Union membership. As result, hydrocarbon imports would be effective and beneficial in resolving energy deficits in short run, but Tajikistan would remain energy-dependent, and this could be costly for the national economy in the future. Foreign Affairs Minister Sirojiddin Aslov declared at press conference on July 28: “We are studying the experience of Armenia and Kyrgyzstan, which joined the organization recently. We will research the activities, successes and negative consequences in these countries. Tajikistan will make a final decision only after careful consideration of all aspects.”40 However, it is doubtful that a decision made by Dushanbe would be made without external pressure, since Russia has significant de facto influence over important national issues. Hosting about 1.5 million migrant workers gives very influential leverage up Putin’s sleeve. For instance, during the Russian-Tajik political crisis in 2011 due to the imprisonment of two Russian pilots in Tajikistan, a series of police raids on labor migrants and mass deportations were conducted to create pressure on the Tajik government until the pilots were released. Indeed, deporting many migrant workers would not only cut the inflow of remittances to the national budget, but also create social instability because the return of so many frustrated people could immediately transform Tajikistan’s fragile tranquility into anarchy. In other words, Russia can exercise and influence on the Tajik economy as well as on political developments. In comments about Economic Union agreement, President Karimov said, “They are saying that they create only an economic market and they will not, in any way, weaken national sovereignty and independence. But tell me, could political independence exist without economic?” Hopefully the decision about Tajikistan’s Union membership will be made based on national interests, not under external political pressure.

39 Sangtuda, “O Kompanii (About the Company),” accessed July 2, 2015, http://www.sangtuda.com/ru/about-us/inf. 40 Regnum, “Tadzhikistan Izuchaet Vozmozhnost Prisoedineniya k EAES (Tajikistan Studies Possibility of Becoming Member of EAEU),” Regnum Informational Agency, July 28, 2015, http://regnum.ru/news/economy/1946913.html. Eurasian Integration: Effects on Central Asia 15

Uzbekistan Uzbekistan remains unenthusiastic regarding the Eurasian integration process. In the year 2012, Uzbekistan’s import partners were Russia (20.7%) and Kazakhstan (12.5%); and their export partners were Kazakhstan (15.9%) and Russia (14.7%).41 Despite significant trade volumes with Economic Union member states, Tashkent strongly resists taking part in any form of regional integration. President Islam Karimov recently said, "Several states are trying to return to the old days and the conditions of the Soviet regime. Some foreign TV broadcasts praise the former regime. But we won't do it. We have our own way of development; we have a responsibility to our people. Speaking frankly, Uzbekistan won't join the Eurasian Union and the Customs Union.”4243 Although one-third of its trade balance is with Union members, Uzbekistan is reluctant to affiliate itself with the Union because Tashkent sees Eurasian integration as supranational political structure that would jeopardize Uzbekistan’s sovereignty.

Turkmenistan Among all the Central Asian states, Turkmenistan is the country least involved in Eurasian integration. Since Turkmenistan does not have significant trade volumes, except for energy products, Ashgabat‘s relationship with the Economic Union will depend on energy-related developments in the region. Energy-abundant Turkmenistan has 618.1 trillion cubic feet of proven natural gas reserves (4th in the world) and 0.6 billion barrels of proven oil reserves (28th in the world)44. Turkmenistan extracts 69.2 bcm annually (2013) and predominantly exports to China (81%), Italy (5.3%) and Turkey (3.2%); Economic Union exports constitute 3.6% (Russia 1.9% and Kazakhstan 1.7%). And as for annual imports, Russia constitutes only 12.6% of the total trade volume (2012).45 Since in terms of domestic energy consumption Turkmenistan is fully independent, and import-wise Ashgabat does not rely on Economic Union markets, President Gurbanguly Berdimuhamedow is not eager to strengthen relationships with his modest trade partners at the expense of creating new structural barriers with his major trade associates. Consequently, it is unlikely that we will see traditionally distant Turkmenistan applying to the Economic Union in the foreseeable future. On the contrary, Turkmenistan has made significant efforts to extend its markets not only to the East by taking part in construction of the

41 The World Factbook, “Central Asia: Uzbekistan” (CIA), accessed July 16, 2015, https://www.cia.gov/library/publications/the-world-factbook/geos/uz.html. 42 Vesti, “Islam Karimov Otkazalsya Vstupat v Evraziyskiy Soyuz (Islam Karimov Refused to Enter Eurasian Union),” January 13, 2013, http://www.vesti.uz/index.php?option=com_content&view=article&id=48326. 43 KAZINFORM, “Uzbekistan Not to Join Eurasian Union and Customs Union – Islam Karimov,” January 15, 2015, http://inform.kz/eng/article/2736945. 44 Ibid 45 The World Factbook, “Central Asia: Turkmenistan” (CIA), accessed July 20, 2015, https://www.cia.gov/library/publications/the-world-factbook/geos/tx.html. 16 Vladimir Fedorenko

Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline, but also exploring opportunities to sell natural gas directly to Europe.46 Moreover, Turkmenistan has experienced some transaction difficulties with the Russian Gazprom Company. It may seem to be a paradox, but it is quite common for energy- abundant countries to buy the same kind of energy products that are for sale through existing energy transport routes. In 2003 Ashgabat signed a 25-year export agreement to deliver 40 bcm to Russia annually. However, the supply of natural gas decreased to 12 bcm in 2009 and then to 4 bcm in 2014. The domestic price of natural gas in Russia is 1,500 RUB (approximately $25) for 1000 cm, and the cost for exported 1000 cm is more than $200. 47 Therefore, Ashgabat does not need to affiliate itself with the Economic Union because of lack of contemporary economic benefits. There are no serious incentives for Turkmen elites or willingness of the Turkmen people to enter the Economic Union.

Regional Factors

Security Security plays an instrumental role in Eurasian integration. The Collective Security Treaty (CST) of CIS was created on May 15, 1992 as an intergovernmental military alliance that was signed by Armenia, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. Later Azerbaijan, Belarus and Georgia signed the agreement as well. The protocol extending the treaty for another five years was signed on April 2, 1999 by Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. However, Azerbaijan, Georgia and Uzbekistan withdrew from the CST.48 In May 2002 the Collective Security Treaty of CIS was transformed into the Collective Security Treaty Organization (CSTO). The main aim of the organization is promoting stability, peace, and regional and international security, as well as ensuring joint protection of territorial integrity and independence of the organization’s member states by “deepening of military-political cooperation, formation of multilateral structures and mechanisms of cooperation” 49 . In 2009 the CSTO established the Collective Rapid Reaction Force, a joint military force responsible for fighting against terrorism and drug trafficking and preventing military aggression against member states.50 Uzbekistan had remained distant throughout the various stages of Eurasian integration, but considered becoming a member of the security organization. In the aftermath of the Andijan Massacre on May 16, 2005, and due to security concerns and strained

46 Arkadiy Dubnov, “Gurbanguly Berdymuhamedov Ishet Puti Na Zapad (Gurbanguly Berdymuhamedov Searches for Routes to the West),” Slon, March 26, 2015, https://slon.ru/posts/49755. 47 “Pochemu Gazpromu Pokupat Gaz Za Rubezhom? (Why Gazprom Buys Gas Abroad?),” Meduza, July 9, 2015, https://meduza.io/feature/2015/07/09/zachem-gazpromu-pokupat-gaz-za-rubezhom. 48 Miles Yu, “Uzbekistan Exits Russia-Controlled Pact, Joining Georgia, Azerbaijan,” World Tribune, July 10, 2015, http://www.worldtribune.com/2012/07/10/uzbekistan-exits-russia-controlled-pact- joining-georgia-azerbaijan/. 49 “Basic Facts” (CSTO), accessed August 1, 2015, http://www.odkb.gov.ru/start/index_aengl.htm. 50 Yuriy Gavrilov, Vladimir Kuzmin, and Mihail Falaleev, “Sessiya ODKB: Summa Sil (Session of CSTO: Sum of Powers),” Rossiyskaya Gazeta (Russian Newspaper), February 5, 2009, http://www.rg.ru/2009/02/05/armiya.html. Eurasian Integration: Effects on Central Asia 17

relationships with the West, Uzbekistan joined CSTO for the second time on August 16, 2006 and remained a member until June 28, 2012. Security is instrumental in ensuring the stability and longevity of economic development in the region. In fact, Central Asia is a turbulent region that has witnessed civil war, ethnic clashes, violent insurgencies and terrorist attacks in the last two decades. The existence of regional military cooperation serves as a deterrent to potential large-scale outbreaks of violence. During the civil war in Tajikistan (1992-1997), for instance, military cooperation of the governments of Russia, Tajikistan and Uzbekistan was able to mitigate the conflict and bring belligerent parties of the Tajik government and United Tajik Opposition into negotiations that resulted in a comprehensive peace treaty. Arab Spring, proximity to turbulent Afghanistan, active terrorist organizations in Central Asia, the growing influence of the Islamic State of Iraq and the Levant (ISIS), and other factors constitute growing security concerns for the Central Asian governments. For instance, many Central Asians (various sources cite 1,000 to 4,000 recruited from Central Asia) have travelled to Syria to join militant radicals and fight for a self-proclaimed Islamic state.51 52 Moreover, the regional radical militant group Islamic Movement of Uzbekistan (IMU), the main rival of Karimov’s government, has recently announced its self- dissolution and pledged allegiance to ISIS. The return of radical militants from Syria and cooperation with local religious extremists to establish ISIS in Khorasan province could jeopardize stability in the region. Furthermore, such radical groups could become attractive to antigovernment circles and opposition parties. Therefore, Central Asian states rely on Russian military assistance if their national security is in jeopardy. The likelihood of such a gloomy scenario is rather low, but such security concerns deserve proper attention.

Political Implications and Practicality When establishment of the Eurasian Customs Union was announced, many Western experts were skeptical about the influence, and even the longevity, of Russian-led regional economic integration. 5354 The blueprint for development of Eurasian integration was drawn among elites and on the state level without citizen input. It is questionable, however, whether national elites rely extensively on Russian support to implement required developments for Eurasian integration. Alexey Malashenko, scholar at the Carnegie Moscow Center, writes, “And let's speak openly, Russia just buys members of EAEU, pays money or keeps prices of hydrocarbons low. As soon as this mechanism stops working, the situation becomes tense. For example, in the situation with Armenia after the price of hydrocarbons was raised by 17%, people were about to

51 Shawn Snow, “ISIS Looks for Foothold in Central Asia,” The Diplomat, January 18, 2015, http://thediplomat.com/2015/01/isis-looks-for-foothold-in-central-asia/. 52 Theresa Krinninger, “A Better Life in the Caliphate,” Development and Cooperation, March 3, 2015, http://www.dandc.eu/en/article/isis-recruiting-fighters-central-asia. 53 Casey Michel, “Eurasian Economic Union: Dead on Arrival?,” The Diplomat, January 5, 2015, http://thediplomat.com/2015/01/eurasian-economic-union-dead-on-arrival/. 54 Richard Weitz, “After Ukraine, Putin’s Eurasian Union Could Be Dead on Arrival” (Hudson Institute, January 6, 2015), http://www.hudson.org/research/10919-after-ukraine-putin-s-eurasian- union-could-be-dead-on-arrival. 18 Vladimir Fedorenko

organize ‘Armenian Maidan’.”55 The Russian economy obviously suffered from the drastic fall in oil prices, currency devaluation, Western anti-Russian sanctions, the Crimean issue, and ongoing war in Ukraine; the Kremlin could fall short on providing promised financial assistance to current or prospective Economic Union members. The national interests and degrees of commitment of potential members to the Economic Union were calculated primarily from the macroeconomic perspective, and state-level analyses of regional trade patterns, without proper consideration of many domestic dynamics such as geographic proclivities, infrastructure, rural areas, border populations, regionalism, social cleavages, small and mid-size businesses, and human capacity calculations. Moreover, many domestic players who were left outside the discussion on Eurasian integration were unable to contribute their knowledge and experience to the process, for instance, intellectuals, entrepreneurs, chambers of commerce, civil society organizations and various community leaders. Therefore, not only traditional economic indicators but also practical-level implications could shape or alter development of national priorities. Two main dynamics affecting progress in Central Asia are ruling elites and public engagement. Public engagement in Central Asian countries is not as clear and articulate as in Western democracies; however, it still shapes domestic trends, trade, business connections and other developments in many direct and indirect ways. For an ordinary Tajik or Kyrgyz citizen, for instance, the rights to reside, invest and work in member countries, particularly Russia, on equal terms with their citizens, would be more important due to their practical value than macroeconomic indicators such as negative trade balances or diversification of domestic economies. Likewise, for common consumers, the availability of high-quality cheap products or affordable and undisrupted electricity supply would be more attractive and valuable factors than interstate competitiveness of local entrepreneurs or national energy independence.

The Role of Media Another factor is Russian TV channels, which are very popular sources of information throughout Central Asia.56 The progress of Eurasian integration is often discussed on Russian TV with enthusiasm and detailed elaboration of the common benefits, but it is difficult to find a comprehensive discussion of the disadvantages of ongoing economic integration. Official mass media channels spread propaganda on Eurasianism and the advantages of the integration process, conveying a positive image of Russia as the main partner of Kazakhstan in the Eurasian Economic Union. For instance, official media channels in Astana used the following titles when Kazakhstan signed the agreement to enter the Economic Union on May 29, 2014: “Finally done!” and “Historic event.”57

55 Sergey Mets and Aleksandr Malashenko, “Rossiya Proigryvaet v Tsentralnoy Azii (Russia Loses in Central Asia),” Moscow Carnegie Center, July 15, 2015, http://carnegie.ru/2015/07/15/ru-60743/idh3. 56 Paul Coyer, “The Media Battle for Hearts and Minds in Russia and Central Asia,” Forbes, December 31, 2014, http://www.forbes.com/sites/paulcoyer/2014/12/31/does-public-opinion-matter- to-authoritarian-leaders/. 57 Maksim Lihachev, “Obraz Rossii v Mass-Media Kazahstan (Image of Russia in Mass Media of Kazakhstan)” (Russian Institute of Strategic Research, July 30, 2015), http://riss.ru/analitycs/19358/. Eurasian Integration: Effects on Central Asia 19

Rita Karasartova, director of the Kyrgyz Institute of Public Opinion, believes that the Kremlin spreads its politics in Kyrgyzstan through mass media, especially Russian media channels. She said, “In Kyrgyzstan there are many more Russian than Kyrgyz media sources. Nowadays, when not all Kyrgyz people have access to the Internet, TV has great power. The Kremlin spreads its mass media, which does its work.” Media expert Marat Tokoev said, “Whether we want it or not, we perceive most of the events in the world through Russian media sources, their commentaries and analysis.”58 Since all major TV channels are pro-government, one is unlikely to hear criticism regarding developments in the Economic Union, which is currently the magnum opus of the Kremlin’s policy, and especially about disadvantages for Central Asian economies.59 As a result, due to practical interest, most Central Asian people are well-informed about the benefits of membership in the Union, but unaware of possible negative outcomes.

Conclusion: Duality in Eurasian Integration It seems that as a result of the development of the Eurasian integration process, two views about the mission of integration have emerged. The first, Nazarbaev’s vision, is a well-publicized official roadmap aiming to create a liberal economic union with the goal of strengthening intra-union collaboration and increasing collective benefits. Eventually, it envisions development of partnerships and possibly integration with other customs unions and advanced economies. As for the second, Dugin’s vision, it has diverged and developed as result of the Kremlin’s political ambitions and confrontation with the West. Neo-Eurasianism gives Moscow ideological depth in defining its confrontation with the West, justifies involvement in territories identified as the “Russian World” (such as war in Georgia [South Ossetia], annexation of the Crimean peninsula and war in Ukraine [Novorossiya]) and creates a national myth to generate support from the domestic constituency. For the land-locked economies of the Central Asian republics, regional economic cooperation and trade constitute an essential factor of sustainable growth. Therefore, any regional or international establishments like the Eurasian Economic Union that promote international trade and facilitate movement of goods, capital, labor and services between member states would be welcomed. If properly implemented, intra-union cooperation could strengthen local business and make them more competitive in global markets, attract foreign investments, strengthen the middle class, and eventually liberalize the economy. It could also facilitate adopting resolutions for a number of regional dilemmas such as border delimitation disputes, enclave problems in the Fergana Valley and transboundary water cooperation.

58 Sabyr Abdumomunov, “Gallup: V Kyrgyzstane Silno Vliyanie Kremlya (Gallup: Influence of Kremlin Is Big in Kyrgyzstan),” June 17, 2015, http://rus.azattyk.org/content/article/27076844.html. 59 Peter Pomerantsev, “Inside Putin’s Information War,” Politico Magazine, January 4, 2015, http://www.politico.com/magazine/story/2015/01/putin-russia-tv-113960_Page3.html#.VceRRvlVikp.

20 Vladimir Fedorenko

However, there is concern that the initial purpose of Eurasian integration could shift from interstate cooperation toward the creation of a more intrusive supranational structure. Especially after the annexation of Crimea, the Ukrainian crisis and Western sanctions, Russia has adopted more aggressive and persistent behavior that could damage trust among the members of the Eurasian Economic Union. In fact, Astana feels the necessity of making periodic announcement that Kazakhstan does not seek and will not accept any political integration or supranational structure. If mechanisms for equality and regulation become instruments of political and economic pressure, the Economic Union will lose its attractiveness as a union that could otherwise be mutually beneficial for all member countries. Therefore, lack of a robust mechanism for checks and balances in the international structure has become a source of concern. It would be naïve to think that with such economic dominance and control of the media, energy resources and finances, the Kremlin needs a political structure to push its agenda forward. With such powerful leverage, Moscow already has de facto Functionalism. The paramount task of trade blocks and customs unions is to create protection barriers from outside influence and foster intra-block trade and cooperation among similar-level economies. Economic disparity is apparent when comparing Russia with Central Asian countries; therefore, hasty and unbalanced integration could become counterproductive for Central Asia and further increase the disparity between strong and weak economies. Disintegration of the Eurasian Economic Union is rather unlikely due to the amount of efforts and investments made by various stakeholders and member states. Economic cooperation and proper integration on a liberal basis are instrumental for sustainable development and transformation from a land-locked to a land-linked Central Asia. In order to devise an efficient, comprehensive and balanced format of interstate economic cooperation, not only government, but also all segments of society and economic circles should be actively engaged in the process of economic development. United States involvement in the region could be beneficial for Central Asian republics. The U.S. can play an instrumental role in restoring the geopolitical balance. Collaboration with the U.S. provides some leverage to Central Asian republics in negotiations with Russia. However, U.S. involvement in the region should not be anti-Russian or anti- Eurasian, since that is likely to be counterproductive; the engagement should rather focus on strengthening relationships directly with Central Asian republics. The United States need to improve its soft power by providing socioeconomic opportunities for Central Asian businesses, such as financial investments in transportation, energy and infrastructure and assistance in human capacity building. Moreover, further development of the New Silk Road project introduced by the U.S. provides tangible socioeconomic opportunities that would interest ruling elites and business circles in Central Asia. Another significant player affecting the geopolitical balance in the Central Asian region is China. Many experts see the Economic Union as an instrument to push China to the periphery by creating a stronger alternative to the Shanghai Cooperation Organization (SCO), where Russia is overshadow by the Chinese presence. China is Russia’s biggest trade competitor in the region. As a result of the creation of the Economic Union, China is the most affected non-union state trade-wise, due to high trade barriers. However, neither Chinese nor Russian authorities openly criticize one another. Russia is careful not to add open struggle with China to and already difficult situation due to strained Eurasian Integration: Effects on Central Asia 21

relationships with the West. On the contrary, President Putin tries to set a positive tone: “As a perspective, I think, it is worth considering the possibility of harmonious cooperation of Eurasian economic integration and the Chinese Silk Road initiative.” There is a high probability that a silent Sino-Russian struggle is going to continue in Central Asia. Nonetheless, China’s presence and its pragmatic, business-oriented and demonstrably non-political engagement in the region is a positive development that introduces interconnectedness, and economic and strategic diversification for Central Asian republics.

22 Vladimir Fedorenko

About the Author Vladimir Fedorenko is a residential research fellow at Rethink Institute. He specializes in democratization processes, civil society and civic movements, identity politics and nation- building processes in Central Asia and Russia. He received BAs in international relations from Ege University and accounting at Dokuz Eylul University, Turkey. He received MA in political science from George Mason University. Vladimir is the founder and president of the Tajik American Cultural Association. He is also a columnist at Turkish Journal. He was previously the research director at the Rumi Forum, Washington DC. He has authored several publications and journal articles: “Importance of the Participation of Civil Society into Effective Counter-terrorism Policies” published in one of the NATO Science for Peace and Security book series titled Building Terrorism Resistant Communities; “The Effect of the Extreme Ethnic Nationalism on the Growth of the Terrorism in Russia” published in the NATO Science for Peace and Security Series book titled Counter Terrorism in Diverse Communities. His most recent work titled Central Asia: From Ethnic to Civic Nationalism, published by the Rethink Institute. He is a fluent in Russian, Turkish and Tajik.