THE CENTRAL CAUCASO-ASIAN COUNTRIES AND THE PROSPECTS OF THEIR MEMBERSHIP TO THE EURASIAN ECONOMIC UNION

Abstract

A new Russian-Kazakh regional project, known as the Eurasian Economic Union (EAEU), commenced operation in 2015. Specifically, this means that, as of January 1, 2015, integrated economic processes between Belarus, Kazakhstan and Russia are governed by the Treaty on the Eurasian Economic Union. As of January 2, 2015 Armenia acceded to the EEU, followed by Kyrgyzstan on August 21. Three of these countries (Armenia, Kazakhstan and Kyrgyzstan) belong to the Central Caucaso-Asia region.

If we proceed from the fact that the eight countries (Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) are form two sub-regions – the Central Caucasus and Central Asia – the larger region, which includes both sub-regions, can be called the Central Caucaso-Asia: this preserves the term“Central” as the key one for both regions, while the new term “Caucaso-Asia” is derived from two related terms “Caucasus” and “Asia”.

Central Caucaso-Asia is not integrated because it has no political or cultural homogeneity. At the same time, its component parts have much in common, which makes it possible to regard them as a single region.

Central Caucaso-Asia has several conflict sub-regions in its territory, something that interferes, to various degrees, with economic progress in some of the countries; it also prevents the local countries from using local resources to move together in the desired direction.

It is important to note that Russia is involved both militarily and politically in all regional conflicts in the post-Soviet expanse.

The region’s rich hydrocarbon resources attract investments and tempt regional and world powers to politically dominate there.

The newly coined term “Central Caucaso-Asia” does not merely specify the region’s geographic identity: it is a conceptual idea of the interests of strengthening the local countries’ state sovereignty, which, in principle, contradicts the spirit and idea of Eurasianism.

Following the establishment of the EAEU, some politicians and experts have perceived the event as the ultimate victory of Eurasianism in Russia. In fact between them there is nothing in common.

The principal goal of the EAEU at the current stage is to deepen the trade and economic integration of its member countries, which is in no way linked with the economic model of Eurasianism, even on a theoretical level.

A key economic motif that facilitates the integration process of the EAEU is a redistribution mechanism for revenues from oil and gas. Specifically, no export duty is imposed within the EAEU; consequently, the price of a given resource is reduced by the amount of the export duty in contrast with the global price for said resource, which leads to domestic production subsidies. Export duties are collected only when commodities exit the borders of the EAEU, at which point some of the revenues to be received by Russia would be redistributed to the benefit of other member countries. As oil and gas comprise the main export product for Russia, it is the redistribution of the revenues received from these commodities that is a key economic motive for integration.

Even though the scheme on which the EAEU is based is economically unprofitable for Russia, it is a scheme that secures Moscow’s imperial ambition of the gradual reanimation of the Soviet Union in its modernized form.

At present, it is noteworthy that global prices on raw materials, especially on energy resources, are exhibiting a clear downward trend. Thus, the effectiveness of the redistribution mechanism outlined above is reduced.

As a result of Russian annexation of Crimea and the armed conflict in Eastern Ukraine, as of the spring of 2014, the US (subsequently joined by other countries) imposed economic sanctions against Russia. This posed a new challenge to the EAEU, as the sanctions do not apply to its other member states. As of August 2014, Moscow imposed so-called anti-sanctions, thereby counteracting the existing sanctions against Russia and banning the import of food products from the US and other respective countries.

Given that the sanctions are only imposed against Russia and do not apply to other member counties of the EAEU, the latter have not joined the anti-sanctions as imposed by Russia. Therefore, the goods banned by Moscow may still enter the territory of Russia from other EAEU member countries. This possibility is not ruled out by the common customs territory of the EAEU which includes all of its member countries. As a result, the future of the EAEU is not optimistic.

Expansion of the EAEU in the nearest future by involvement of other countries from the Central Caucaso-Asia is hardly probable. Azerbaijan, Turkmenistan and Uzbekistan are the rich countries having their own hydrocarbon reassures. So they have less interest to use the above mentioned redistribution mechanism for revenues from Russian oil and gas. Georgia has already made its choice to join the EU. And Tajikistan doesn’t hurry to make the final choice.