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A Eurasian Union No More?

putinFor the last few years, Russia has eagerly promoted its grand “Eurasian” project, offering deeper economic integration with former Soviet countries. As proposed by Vladimir Putin in 2011, a Customs Union, or further, a Eurasian Union, was supposed to help the economies of the region flourish by combining their individual strengths and entering the global economy as a strong, consolidated economic entity. Putin officially stated that his proposal was based on a new reality, where to be successful was to be open, transparent and democratic—and had nothing to do with “bringing back the Soviet Union.”

In its original version, the Eurasian Union was supposed to take a good lesson from the European Union in bringing different nations voluntarily under the same roof and most certainly was not focused on any kind of alienation from the rest of the world.

Along with the members of the already established Customs Union—Belarus and Kazakhstan—the key to the success of the project was always Ukraine. Putin, as well as his advisers, clearly understood that without Ukraine, no economic or political cooperation would be sizable enough to be considered a global or even regional center of power. In addition, Ukraine’s historical importance to Russia made the case to use every means possible to win it over. With or without its embattled president Viktor Yanukovych, Ukraine had to be involved in Russia’s new Eurasian project. That is a major reason why, when Kyiv’s ‘Maidan’ revolutionists kicked Yanukovych out of power, Russia attempted to retain its influence in Ukraine.

By the logic of Vladimir Putin and his inner circle, the complete loss of Ukraine to the West would be an incurable illness that would disarm any Russian attempt to recover as a global power. Moreover, Putin feared that Maidan-style protests could at some point spread onto Russia. In his eyes there was no possibility that Kyiv’s new leaders could succeed in reforming their economically stagnant, corruption-riddled state. Moscow had to react, using all capabilities present: propaganda, Russian minorities in Ukraine, military presence if necessary—raising the stakes up to a maximum.

It seems that the West has not understood clearly enough that Ukraine is the single most important entity for Russian aspirations and, yes, for Putin’s legacy. The Kremlin is willing to go to any length necessary not to lose this game.

By pursuing his goals, annexing Crimea and fighting for eastern Ukraine, Putin has ultimately and irrevocably changed the rules of the game and—more important for the future of the region—Russia’s integration proposal to its neighbors.

Putin has always been a realpolitik player—even when it seemed that he was willing to cooperate with the West. Patience has always been his virtue. Now, when his cards are increasingly put on the table, we see that Putin is determined to secure his place in Russia’s history. By unleashing a full-scale media campaign, Putin is proving to Russians and the rest of the world that the results of 1991—namely, the collapse of the Soviet Union—are to be reconsidered. Russia did not lose the war with the West; it merely took a break. Moreover, Putin is proving that the Western way—the liberal governing—is not the only option. In order to reassert Russia’s great-power status, Russia is going back to its imperial roots. And now, the intensity of the situation with Ukraine is calling for decisive actions. Putin played a “Russian civilization” card as an entry pass to the geographical redrawing of the region. In Putin’s eyes, the borders and consensus of 1991 do not work anymore, thus, Russia must do everything it can to secure what it believes belongs to her. And the criteria is very tangible—history, Russian ethnicity or Russian language

For Vladimir Putin—Ukraine is a zero-sum game. Either he wins and gets what he wants or nobody wins and Ukraine will remain an unstable, economically failing and decentralized state. From the very beginning of the Ukraine crisis, Putin acted with the belief that the West would in the end accept his alterations to the European map. From his fourteen years in power, Putin has learned that the West—especially the EU—is incapable of acting as a single unit and is not willing to make high-risk moves. The Kremlin is convinced that it could act quicker than the West could react. And the Crimean saga has proven him correct. Even today, when it is obvious that Russia is deeply involved in eastern Ukraine, the West is still incapable of responding with a unified voice or decision. In the end, the West will unite and act as a single unit, but it now seems that it will be too little, too late.

The Ukraine crisis made Putin reveal the true nature of his aspirations, now visible to Russia’s neighbors, the West and the rest of the world. The main agenda of Putin’s third term in office is to bring back a Russian Empire-like state; it is not Eurasian, it is decisively Russian. It means that Eurasian integration as designed in the beginning doesn’t work anymore. For those nations involved in or invited to join the Eurasian Union, it is now clear that there can be no equal partnership with Russia, only submission. The question is whether submission is going to be pleasant and economically beneficial to all sides, or rather tough and less pleasant for the incorporated entities.

Putin brilliantly works with history, bringing back thousand-year-old images of the Russian “gathering of lands”, which allows him to sell any political move to the vast majority of the Russian or pro-Russian populations in neighboring countries and at home, making this conflict a civilizational issue. Thus, the new Russian proposition to its neighbors is to unite all that is, in a broader sense, Russian (in the region) under the same flag. The integration process is no more about the economic benefits, but about a civilizational choice and historic mission.

This new state of reality, where there is no more status quo, has won Putin an incredible amount of support in Russia, where 80 percent voiced their approval of Putin’s actions and 63 percent agreed that all power in the country is in the hands of Vladimir Putin and that this is a good thing.

The other members of the Customs Union, Belarus and Kazakhstan, were not prepared or happy to see such a change in Russia’s overall strategy, as both Minsk and Astana participated for the economic benefit rather than for political reasons or to aid Russia’s aspirations for regional dominance. Russia’s closest allies do cherish their political independence and will not easily be convinced to rethink the logic of the last twenty-three years of their independence and political and institutional development.

In the case of Kazakhstan, where the entire northern part of the country is largely populated by ethnic Russians, the new reality calls for new policy and the recalibrating of strategic plans. Kazakh nationalists have already begun voicing reasonable concerns over Kazakhstan’s future relations with Moscow. And Belarus president Lukashenko gave mixed signals to both sides. Officially, he has supported Russia’s right to take Crimea, but has spoken unfavorably about the federalization or separation of the Ukrainian state. Both presidents Nazarbayev and Lukashenko are spooked by the scale and readiness of Vladimir Putin to press his agenda. In no way will what Putin has envisioned for the region well suit Lukashenko and Nazarbayev, who have spent decades building up their reputations as “fathers of their nations”. The question as to how Minsk and Astana will deal with new Russian politics is still open and depends greatly on how the Ukraine crisis will be resolved.

Putin’s high stakes game risks the long-term wealth of the Russian state—the very asset Putin has used domestically and internationally to promote his vision over the last fourteen years. It is no secret that for the post-Soviet nations, the attractiveness of membership in the Customs Union or Eurasian Union was rooted in Russia’s financial capabilities and fiscal aid. Both Minsk and Astana gladly used the fruits of Russia’s oil and gas Klondike. Kyrgyzstan, Tajikistan and Armenia were certainly looking forward to getting good deals from Russia and using Putin’s “generosity” to its fullest extent.

But as it seems today, Russia’s Ukrainian aspirations are expensive and that cost will only increase with time. Even before the Ukraine crisis, the Russian economy was slowing, with projected GDP growth of only 1.5 percent. An official April prognosis for 2014’s GDP growth was below 1 percent. Now it seems that, if the conflict continues to escalate and the West continues to levy sanctions on Russia, the Russian economy will start to shrink.

The capital outflow from Russia over the last three months has reached $75 billion and by the end of the year will most likely top $200 billion. Obviously, current tensions with the West and escalating sanctions will not bring new investors to the Russian economy. On top of monies already expended for the upkeep of South Ossetia and Abkhazia, Crimea is an additional burden for the state budget. The estimated cost for Crimean integration would be $4-5 billion per year.

What’s more important in the near future is that Russia will face the necessity to reroute its energy exports away from the EU, which is clearly headed towards acquiring independence from Russia. Currently, Russia’s budget is 55 percent dependent on the gas exports, and, since the EU is the main consumer of Russian energy, Russia’s financial well-being is highly dependent on the EU’s diversification plans. If the EU proceeds with a painful and costly isolation of Russia, demand for Russian energy will decrease substantially. In this scenario, Russia will be forced to look at Asia’s markets for survival.

Considering that for the last twenty years Russia has been focusing on trade with Europe, a quick economic shift to the East is impossible. There is no alternative scenario where Russia does not suffer from its actions in Ukraine, especially in the long run. When the promise of a prosperous tomorrow for the Eurasian economies is gone, Russia will have to rethink its approach to regional integration. But, ultimately, the price of submission will be higher than the price of cooperation.

Ukraine is undoubtedly a turning point that could drastically change the balance of power not only in the region, but also internationally. The future of the Eurasian region is more unclear today that it was twenty years ago and it will most likely remain unclear in the short run.

Anton Barbashin is a Moscow-based international researcher and analyst.

Image: Kremlin photo.

Anthony-Claret Onwutalobi
Anthony-Claret Onwutalobi
Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC and CEO of Portia Web Solutions. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.

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