Eurasian Economic Union
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(from 1 January 2015)
(from 2 January 2015)
Kyrgyzstan (pending ratification of accession treaty)
Tajikistan (negotiating entry conditions)
|-||Chairman of the Eurasian Commission||Viktor Khristenko|
|-||Establishment agreed||18 November 2011|
|-||Eurasian Economic Community||10 October 2000|
|-||Eurasian Customs Union||1 January 2010|
|-||Eurasian Economic Space||1 January 2012|
|-||Eurasian Union Treaty (signed)||29 May 2014|
|-||Eurasian Union (established)||1 January 2015|
7,822,596 sq mi
|-||2014 estimate||182,519,270 (including Crimea and Sevastopol)|
|GDP (PPP)||2013 estimate|
|-||Total||US$4.064 trillions (5th)|
|Time zone||(UTC+2 to +12)|
|Calling code||+374 (in Armenia)
+375 (in Belarus)
+7 (in Kazakhstan and Russia)
Eurasian Economic Commission
|a.||By Kazakhstani President Nursultan Nazarbayev.|
The Eurasian Economic Union (EEU) will be an economic union of states located primarily in northern Eurasia. A treaty aiming for the establishment of the EEU was signed on 29 May 2014 by the leaders of Belarus, Kazakhstan and Russia, and will come into force on 1 January 2015. Treaties aiming for Armenia's and Kyrgyzstan's accession to the Treaty on the Eurasian Economic Union were signed on 9 October 2014 and 23 December respectively. Armenia's accession treaty will come into force on 2 January 2015. Kyrgyzstan's accession treaty is expected to come into force by 1 May 2015.
The Eurasian Economic Union will create a single economic market of 183 million people and a gross domestic product of over 4 trillion U.S. dollars (PPP). The union will operate through supranational and intergovernmental institutions. The supranational institutions are the Eurasian Commission (the executive body), the Court of the EEU (the judicial body) and the Eurasian Development Bank. National governments are usually represented by the Eurasian Commission's Council.
In 1994, President of Kazakhstan, Nursultan Nazarbayev, first suggested the idea of creating a regional trading bloc during a speech at Moscow State University. Numerous treaties were subsequently signed to establish the trading bloc gradually. Many politicians, philosophers and political scientists have since called for further integration towards a political, military and cultural union. However, modern-day Kazakhstan has insisted the union stay purely economic as it seeks to keep its independence and sovereignty intact.
- 1 History
- 2 Geography
- 3 Membership
- 3.1 Ratification status of treaties on accession
- 3.2 Enlargement
- 4 Politics and governance
- 5 Economy
- 6 Demographics
- 7 Foreign affairs
- 8 Existing integration projects
- 9 See also
- 10 References
- 11 External links
After the end of the Cold War and the Dissolution of the Soviet Union, Russia and the Central Asian republics were weakened economically and faced declines in GDP growth. Post-Soviet states underwent economic reforms and privatization. The process of Eurasian integration began immediately after the break-up of the Soviet Union to salvage economic ties with Post-Soviet states through the creation of the Commonwealth of Independent States on 8 December 1991 by the presidents of Belarus, Kazakhstan and Russia.
In 1994, during a speech at Moscow State University President of Kazakhstan, Nursultan Nazarbayev, suggested the idea of creating a regional trading bloc in order to connect and profit from the growing economies of Europe and East Asia. The idea was quickly seen as a way to bolster trade, boost investments in the region, and serve as a counterweight to Western integration unions.
Founding Treaties (1990s)
During the 1990s, the Eurasian integration process was slow, possibly due to the economic crisis experienced after the dissolution of the Soviet Union and the size of the countries involved (Russia, Belarus and Kazakhstan cover an area of about 20 million km2). As a result, numerous treaties have been signed by member states to establish the regional trading bloc gradually.
In 1995, Belarus, Kazakhstan, Russia, and later acceding states Kyrgyzstan and Tajikistan signed the first agreements on the establishment of a Customs Union. Its purpose was to gradually lead the way toward the creation of open borders without passport controls between member states.
In 1996, Belarus, Kazakhstan, Russia and Kyrgyzstan signed the Treaty on Increased Integration in the Economic and Humanitarian Fields to begin economic integration between countries to allow for the creation of common markets for goods, services, capitals, labor, and developing single transport, energy, and information systems.
In 1999, Belarus, Kazakhstan, Russia, Kyrgyzstan and Tajikistan signed the Treaty on the Customs Union and the Single Economic Space by clarifying the goals and policies the states would undertake in order to form the Eurasian Customs Union and the Single Economic Space.
Eurasian Economic Community (2000)
To promote further economic convergence and more cooperation, in 2000 Belarus, Kazakhstan, Russia, Kyrgyzstan and Tajikistan established the Eurasian Economic Community (EurAsEC) which Uzbekistan joined in 2006. The treaty established a common market for its member states. The Eurasian Economic Community was modeled on the European Economic Community. The two had a comparable population size of 171 million and 169 million, respectively. 2003 saw the second Treaty on the Single Economic Space by Belarus, Kazakhstan, and Russia where the groundwork was laid to continue the integration process towards the creation of a broader, integrated single market. Efforts by these countries were also increased in 2006 to further the creation of the Eurasian Customs Union.
Customs Union and Single market (2010 - 2012)
The Customs Union of Belarus, Kazakhstan, and Russia came into existence on January 1, 2010. The Customs Union's priorities were the elimination of intra-bloc tariffs, establishing a common external tariff policy and the elimination of non-tariff barriers. It was launched as a first step towards forming a broader single market inspired by the European Union, though not aiming at a political integration (thus, more similar to UNASUR, NAFTA or ASEAN), with the objective of forming an alliance between former Soviet states. The member states planned to continue with economic integration and were set to remove all customs borders between each other after July 2011.
In 2011, the then-Prime Minister of Russia, Vladimir Putin, announced his support for Nursultan Nazarbayev's idea for the creation of a Eurasian Economic Union. On 18 November 2011, the presidents of Belarus, Kazakhstan, and Russia signed an agreement, setting a target of establishing the Eurasian Economic Union by 2015. The member states put together a joint commission on fostering closer economic ties.
On 1 January 2012, the three states established the Single Economic Space which ensures the effective functioning of a single market for goods, services, capital and labor, and to establish coherent industrial, transport, energy and agricultural policies. The agreement included a roadmap for future integration and established the Eurasian Economic Commission (modeled on the European Commission). The Eurasian Economic Commission serves as the regulatory agency for the Eurasian Customs Union, the Single Economic Space and the Eurasian Economic Union.
Eurasian Economic Union
On 29 May 2014, the presidents of Kazakhstan, Belarus and Russia signed the treaty on the Eurasian Economic Union, which comes into effect on 1 January 2015. The presidents of Armenia and Kyrgyzstan were also present at the signing ceremony. Russian president Vladimir Putin stated, "Today we have created a powerful, attractive center of economic development, a big regional market that unites more than 170 million people." Kazakh politicians emphasized the Eurasian Economic Union was not intended to be a political bloc, but a purely economic union. Bakytzhan Sagintayev, the first deputy prime minister of Kazakhstan and lead negotiator, said, "We are not creating a political organization; we are forming a purely economic union." He further stated "it is a pragmatic means to get benefits. We don't meddle into what Russia is doing politically, and they cannot tell us what foreign policy to pursue." By October, the treaty had received parliamentary approval from all three states. On 9 October 2014, a treaty to enlarge the EEU to Armenia was signed. Kyrgyzstan signed a roadmap for its accession and plans to sign a treaty on 23 December 2014 which will make it a full member of the Eurasian Union.
Treaty on the Commonwealth of Independent States
Treaty on Increased Integration in the Economic and Humanitarian Fields
Treaty on the Eurasian Economic Community
Treaties on the Eurasian Customs Union
|2007 & 2011
Treaties on the Eurasian Economic Space
Treaty on the Eurasian Economic Union
|Eurasian Economic Union (EEU)|
|Eurasian Economic Space|
|Eurasian Customs Union (ECU)|
|Eurasian Economic Community (EurAsEC)|
|Increased Integration in the Economic and Humanitarian Fields|
|Commonwealth of Independent States (CIS)|
|Treaties and development stages of Eurasian Economic Union|
Treaty on the Customs Union between
Belarus and Russia
Agreement on Increased Integration in the Economic and Humanitarian Fields
Belarus, Kazakhstan, Russia, Kyrgyzstan
Treaty on the Customs Union and the Single Economic Space
Belarus, Kazakhstan, Russia, Kyrgyzstan, Tajikistan
Treaty on the establishment the Eurasian Economic Community (EurAsEC)
Belarus, Kazakhstan, Russia, Kyrgyzstan, Tajikistan
Treaty on forming the Single Economic Space
Belarus, Kazakhstan, Russia, Ukraine
Treaty on the Commission of the Customs Union
Belarus, Kazakhstan, Russia
Establishment of the Customs Union
Belarus, Kazakhstan, Russia
Treaty on the Eurasian Economic Commission
Belarus, Kazakhstan, Russia
Establishment of the Single Economic Space
Belarus, Kazakhstan, Russia
Establishment of the Eurasian Economic Union
The Eurasian Economic Union is located at the eastern end of Europe, bounded by the Arctic in the north, the Pacific Ocean to the east and East Asia, the Middle East and part of Central Asia to the south. It lies between latitudes 39° and 82°N and longitudes 19°E and 169°W. The union extends across much of northern Eurasia. Its member states cover an area of over 20,000,000 square kilometers, approximately 15% of the world's land surface.
The Eastern European Plain encompasses Belarus and most of European Russia. The plain is mostly mountain-free and comprises several plateaus. Russia's northernmost regions are tundra. The Russian Tundra is located on the coastline with the Arctic and is known for its total darkness in the winter. Taiga reaches Russia's southern borders in Siberia and accounts for 60% of the country. Towards the Ural Mountains and in northern Kazakhstan, the climate is mostly temperate. South-West Russia and Kazakhstan are mostly steppe. The Kazakh steppe covers one-third of Kazakhstan and is the world's largest dry steppe region. Armenia is mostly mountainous and its climate is continental. The landlocked country shares no direct border with other members states. It is located in the Caucasus region in the Armenian Highlands.
A large amount of lakes and rivers are found in the Eurasian Economic Union. Major lakes include Ladoga and Onega, two of the largest lakes in Europe. The largest and most prominent of the union's bodies of fresh water is Lake Baikal, the world's deepest, purest, oldest and most capacious fresh water lake. The Baikal lake alone contains over one-fifth of the world's fresh surface water. Russia is second only to Brazil in volume of the total renewable water resources. Of the union's numerous rivers, the Volga is the most famous, not only because it is the longest in Europe, but also because of its major role in history. In Siberia the Ob, Yenisey, Lena and Amur are among the longest rivers in the world.
The Eurasian Economic Union's highest peak is the Khan Tengri in the Tian Shan mountains, Kazakhstan, 7,010 m above sea level. The lowest point in the Eurasian Economic Union is the Karagiye Depression in Kazakhstan. Kazakhstan's Caspian shore includes some of the lowest elevations on Earth. According to a 2005 estimate by the United Nations, forests cover 40% of Belarus. 11,000 lakes and many water streams are found in the country. Russia is known for its extensive mineral and energy resources, the largest reserves in the world, making it the world's largest producer of oil and natural gas.
According to estimates, the Eurasian Economic Union's population of 183 million people is mostly urbanized, with Russia and Belarus having over 70% of their population living in urban areas. In Armenia over 64% of the population lives in urban areas. Kazakhstan's urban population comprises 54% of the country's total population.
|Signatory states to the founding treaty||Acceding Members||Potential future members|
The treaty establishing the Eurasian Economic Union was formally signed by three states which were part of the former Soviet Union: Belarus, Kazakhstan, and Russia. An agreement to enlarge the EEU to Armenia was later signed, with Kyrgyzstan planning to sign an accession agreement on December 23.
Armenia announced its decision to join the Eurasian Customs Union in September 2013. President Serj Sargsyan announced the decision after talks with his Russian counterpart President Vladimir Putin in Moscow. The treaty enlarging the EEU to Armenia was signed on October 9, 2014. Armenia is the only country of the EEU that has no common border with the other member states of the union. Georgia guaranteed a free transit corridor for exporting its goods to the Eurasian Economic Union, Armenian deputy economy minister Emil Tarasyan said.
Ratification status of treaties on accession
Treaty on the Eurasian Economic Union
|Belarus||9 October 2014||Council of the Republic||64||0||0||1 January 2015|||
|9 October 2014||House of Representatives||Approved|||
|9 October 2014||Presidential Assent||Granted|||
|Kazakhstan||9 October 2014||Senate||Approved||1 January 2015|||
|1 October 2014||Majilis||101||0||3|||
|14 October 2014||Presidential Assent||Granted|||
|Russia||1 October 2014||Federation Council||140||0||0||1 January 2015|||
|26 September 2014||State Duma||441||0||1|||
|3 October 2014||Presidential Assent||Granted|||
Treaty on the accession of the Republic of Armenia to the Treaty on the Eurasian Economic Union
|4 December 2014||National Assembry||103||7||1|||
|Belarus||19 December 2014||Council of the Republic||Approved|||
|19 December 2014||House of Representatives||Approved|||
|Kazakhstan||19 December 2014||Senate||Approved|||
|18 December 2014||Majilis||Approved|||
|24 December 2014||Presidential Assent||Granted|||
|Russia||17 December 2014||Federation Council||Approved|||
|10 December 2014||State Duma||Approved|||
|22 December 2014||Presidential Assent||Granted|||
Treaty on the accession of the Kyrgyz Republic to the Treaty on the Eurasian Economic Union
Russian President Vladimir Putin has stated that his goal was to enlarge the Customs Union to all Post-Soviet states, excluding the three Baltic EU member states. According to The Guardian newspaper, Putin's plan is for the Eurasian Union to grow into a "powerful, supra-national union" of sovereign states like the European Union, uniting economies, legal systems, customs services, and military capabilities to form a bridge between Europe and Asia and rival the EU, the US, China, and India by 2015.
Several candidates in Kyrgyzstan's 2011 presidential election endorsed the concept. Russian Foreign Minister, Sergei Lavrov announced on August 11, 2014 that Russia would provide USD$500 million to speed up Kyrgyzstan's integration into the Eurasian Economic Union.
Uzbekistan remains hesitant to join the Economic Union, with Uzbek officials making opposing claims on the prospect of integration. The country prefers not to pursue economic and political integration as of now. Russian officials have stated that integration with the country would be slow and analysts state that as Russian influence and trade increases in Kyrgyzstan and Tajikistan it may persuade Uzbekistan to join in the future.
Moldova, Ukraine and Georgia have been offered by both the European Union and the Eurasian Economic Union to join their integration unions. All three countries opted for the European Union by signing association agreements on March 21, 2014. However break-away regions of Moldova (Transnistria), Ukraine (Donetsk and Lugansk) and Georgia (South Ossetia and Abkhazia) have expressed a desire to join the Eurasian Customs Union and integrate into the Eurasian Economic Union.
Ukraine submitted an application to participate in the Eurasian Economic Union as an observer in August 2013. Russian pressure for Ukraine to join the Eurasian Economic Union instead of the European Union was a key factor in the Euromaidan protests that ended Viktor Yanukovych's rule as president of Ukraine and led to the Crimean Crisis. Its membership was seen by some analysts as the key to the success of the union as Ukraine has the second largest economy of any of the 15 former republics of the Soviet Union. With high tensions between Russia and Ukraine in the wake of the crisis, Ukraine decided to pursue integration with the EU.
Georgia's Prime Minister Bidzina Ivanishvili said in September 2013 he was studying the possibility of acceding to the Union, although he later clarified that Georgia's main strategy was still to integrate into the European Union. Russia's Prime Minister Dmitri Medvedev included Georgia as a prospective member in statements made in August 2013.
Politics and governance
The Eurasian Economic Union has sought to base its model on the European Union.
Important decisions for the Eurasian Economic Union are addressed by the Supreme Eurasian Economic Council, which is composed of the Heads of State of the Member States. The Supreme Council determines the strategy, direction and prospects of integration and takes decisions aimed at achieving the goals of the union.
The Eurasian Economic Commission carries out its work in compliance with the Treaty on the Eurasian Economic Commission (EEC) and the international agreements that provide the legal and regulatory framework of the Customs Union and the Single Economic Space.
Eurasian Economic Commission
The agreement signed by Russia's prime minister Dmitry Medvedev, Kazakhstan's president Nursultan Nazarbayev and Belarus' president Alexander Lukashenko established the Eurasian Commission, the supranational governing body of the Eurasian Economic Space, which started work on 1 January 2012. The Eurasian Commission was modeled on the European Commission. Its headquarters are in Moscow. The commission monitors subordinate branches and advisory bodies. In 2015, its departments will be greatly expanded, and the number of international employees will increase from 150 to 1,200.
The Eurasian Commission can take decisions on not only the customs policy of the union but also on the macro-economy, the competition regulations, the energy policy and the fiscal policy of the Eurasian Economic Union. It has strict anti-corruption laws.
The Eurasian Economic Commission consists of two bodies:
The council is composed of the Vice Prime Ministers of the member states. The council of the Commission oversees the integration processes in the Union, and is responsible for the overall management of the Eurasian Commission. It monitors the commission by approving the draft budget of the union, the maximum number of personnel, and the qualification requirements for the commission's employees. The council convenes once every quarter.
It also considers issues of customs cooperation, trade and development of Eurasian integration. The council regularly holds discussions on the important aspects of the EEU and meets with business representatives of the Member States.
This article is part of a series on the
The board is composed of 9 commissioners, one of which is the Chairman of the board. Each member state provides 3 commissioners to the Board of the Eurasian Commission who carry out the operational management and oversee the everyday work of the Eurasian Commission. All 9 commissioners are appointed by the Supreme Eurasian Council for a four year renewable term. The commissioners also receive the status of federal ministers in their respective countries.
The board of the Commission is the executive body of the Commission. It convenes once every week at least, and is responsible for the day-to-day running of the Eurasian Economic Union. It has a wide range of activities, including monitoring the implementation of treaties, submitting annual progress reports and making recommendations. The board of the commission also assists member states in the settlement of disputes, and carries out the draft of the union's budget. Part of its activities include being the intermediary between the departments of the commission and the heads of state of the member states.
A number of departments are headed by the commissioners. The lower rank staff is composed of 84% Russian officials, 10% Kazakhs and 6% Belarusians, proportional to the populations of the member states. The departments enable the Board of the Eurasian Commission is eligible to make decisions not only with regard to customs policies but in such areas as macroeconomics, regulation of economic competition, energy policy and financial policy. The Commission departments are also involved in government procurement and labor migration control.
The expenses of the infrastructure and accommodation of commission workers are financed by Russia, while in general the commission budget is financed by all three countries and dependent on taxation shares received from the Customs Union of Belarus, Kazakhstan and Russia.
Eurasian Development Bank
Its mission is to facilitate the development of market economies, economic growth and the expansion of trade its member states through investments. The bank's objectives also include financing projects that support Eurasian integration.
The Bank has provided financing totaling more than US $4,5 billion to investment projects in its member states.
The Chairman of the Management Board is elected for four years and may be re-elected for only one additional term of office.
The Eurasian Development Bank releases numerous journals, reports and studies which include the analysis of regional economic integration, namely market integration and economic convergence. The first aspect is evaluated on the basis of six indices that measure integration in the fields of trade, labour migration, electrical power engineering, agriculture, education and investments. The second aspect is evaluated on regional integration in the fields of macroeconomics, monetary policy, fiscal policy and financial policy. It then oversees and promotes projects to deepen integration in post-soviet states. The Eurasian Integration Yearbook, a yearly publication, highlights and publishes papers on a wide spectrum of key regional integration issues.
Eurasian Inter-Parliamentary Assembly
In 2012, the creation of a Eurasian parliament was under consideration. However, it was considered too premature, and member states have instead considered creating an Inter-Parliamentary Assembly for the Eurasian Economic Union whose role is to facilitate interaction between the parliaments of the member states and work on harmonization of national laws and legal codes of the member states.
Court of the Eurasian Economic Union
In 2015, the new court will replace the Court of the Eurasian Economic Community (EurAsEC Court). It will be in charge of dispute resolution and the interpretation of the legal order within the Eurasian Economic Union. Its headquarters will be in Minsk. According to the second annex to the treaty on the Eurasian Economic Union, the court is composed of two judges from each member state, appointed by the Supreme Eurasian Council. Their term of office is 9 years.
Formation and overview
The Treaty on Increased integration in the Economic and Humanitarian Fields signed in 1996 laid the first foundation for economic convergence. The treaty ensured the creation of a permanent executive organ to oversee integration. It served as the blueprint for the future common market for goods, services, capital and labor. The treaty provided the basic framework for the Single Economic Space, which came into existence in 2012. The Single Economic Space established a single market across the territory of Belarus, Russia and Kazakhstan. The three countries represent a market of some 171 million people and a combined GDP of around $2.3 trillion.
Russia has the 8th largest economy in the world by nominal GDP and the 6th largest by purchasing power parity. Since the turn of the century, member states have experienced economic growth with GDP averaging 6% to 8% growth between 2000 and 2007, rising again in 2010 after the Financial crisis of 2007–08. Since the establishment of the Eurasian Customs Union in 2010, trade between member states rose sharply. In 2011 mutual trade was USD 63.1 billion, 33.9% more than in 2010. In 2012, mutual trade was USD 67.9 billion and combined exports reached USD 593.7 billion, while imports were USD 340.9 billion. The first integration stage primarily enhanced trade among member states, bolstered economies and created a legal and institutional foundation for the member states. The second stage includes the free movements of goods, people, services and capital.
The Eurasian Economic Union is designed to reach a number of macroeconomic objectives such as reducing commodity prices by reducing the cost of transportation of raw materials, increasing return on new technologies and products due to the increased market volume, and promoting "healthy" competition in the common market. It is also designed to lower food prices, increase employment in industries and increase production capacity.
The Eurasian Union is considered as a major player in the world's energy sector, raw materials, arms industry and agricultural production. In 2013 Russia was the 3rd most successful country in the world in attracting capital from abroad. The significant potential for developing infrastructure has led the member states and its partners to create links by constructing roads, railways, electric power grids and fibre-optic cables.
The core objective of the Single Economic Space was the development of a single market and achieving the "four freedoms". The free movements of goods, capital, services and people within the single market comes into effect on January 1, 2015 (the day the Eurasian Economic Union is established). The free movement of people means that citizens can move freely between member states to live, work, study or retire in another country. Citizens of the member states of the union may travel to other member states on an internal passport. Although Russia also admits access to citizens of other CIS states without a passport, it is expected that after 2015 only citizens of the Customs Union will have this privilege. Member states have a common external tariff on all goods entering the market and unified methods of valuing imported goods since the creation of the Eurasian Customs Union on January 1, 2010. Objectives include joint coordination in the area of energy, industry, agriculture and transport.
Roughly 75% of Belarusian goods are exported, about half of which go to other member states. Trade within the union primarily consists of Belarusian machinery and agricultural products which are exported to Russia. Low gas prices from Russian energy producers are guaranteed to member states or countries wishing to join the union.
The Eurasian Economic Commission operates a competition policy to ensure equal competitive conditions in the commodity markets of the Single Economic Space. It also aims at harmonization and improvement of legislation of each of the three countries in regard to competition policy. The commission serves as the competition regulator for the single market and is also responsible of antitrust issues. Special regulations limits state intervention in the economy.
The idea of the new joint currency was proposed by Kazakh President Nursultan Nazarbayev. When discussing the Eurasian Economic Union, Vladimir Putin said the Eurasian Economic Union would include closer coordination of economic and monetary policy, including the use of a common currency in the future. Although the creation of a monetary union was not envisaged in the Eurasian Economic Union Treaty, Russian Prime Minister Dmitry Medvedev, called for the introduction of a common currency for the Eurasian Economic Union. Leonid Slutsky, head of the State Duma's CIS committee backed Medvedev's proposal to start discussions on the creation of a monetary union. Slutsky said it could be introduced shortly after 2015, when the union's structure becomes clear. Belarusian president, Alexander Lukashenko, circulated the idea of creating a "new euro" for the Eurasian economic bloc. In April 2014, discussions to introduce a single currency resumed.
The Eurasian Economic Union is seen as an energy superpower, producing about 20.7% of the world's natural gas, and 14.6% of the world's oil and gas condensate in 2012, making it the world's top producer in both domains. It also produces 9% of the world's electrical energy and 5.9% of the world's coal, making it the third and fourth producer in the world respectively. In Kazakhstan, energy is the leading economic sector. The country holds about 4 billion tons of proven recoverable oil reserves and 2,000 cubic kilometers (480 cu mi) of gas. Kazakhstan is the world's 17th oil exporter and the world's 23rd natural gas exporter. Russia has the world's largest natural gas reserves, the 8th largest oil reserves, and the second largest coal reserves.
By 2019, Russia, Kazakhstan, Belarus and Armenia intend to create a common electricity market as well as a single hydrocarbons market by 2025. "With the creation of a single hydrocarbons market, we will have a deeper coordination that will allow us to be more competitive both in terms of pricing and in terms of getting high value added products in this very interesting and important market" stated Eurasian Commissioner Akhmetov.
The major economic centers are Moscow, Minsk and Astana. The distance between Moscow and Minsk is 717 kilometers, and the distance between Moscow and Astana is 2700 kilometers, making infrastructure a key challenge for the integration of member states. Major infrastructure projects began during the 2000s in order to modernize and connect the regional bloc to other markets, facilitating both integration and trade in the region. In 2007 Moscow announced it will invest 1 trillion USD by 2020 to modernize the country's infrastructure.
Kazakhstan ranks favorably in terms of miles of road per inhabitant as other developed countries in the world have much less roadway per inhabitant.
Railways have been the primary way of linking countries in the Eurasian Economic Union since the 19th century. It has always been the main way of transport in the Russian Empire and the Soviet Union up until today. The union ranks 2nd in the world in terms of railway trackage (about 7.8% of the world's share), however it is still looking to improve cross-border trade within the union.
The Eurasian Development Bank has pledged to help in the construction of facilities to produce new generation freights cars and freight containers in Tikhvin, Russia and in Osipovichi, Belarus to respond to the increasing demand for rail transport. Projects have also been launched in Kazakhstan, as the landlocked country is highly dependent on railways for trade.
The Trans-Asian Railway and the Asian Highway Network are cooperative projects among countries in Asia and Europe which have helped to improve highway and railway systems across the region. 6 of the 8 major Asian highways go through the Eurasian Economic Union (the AH3, AH4, AH5, AH6, AH7 and the AH8). The highways connect the EEU to many countries including Finland, Turkey, Iran, Pakistan, India, Laos, Thailand, Burma and China. AH6 goes through Russia's Trans-Siberian Highway which is over 11,000 kilometers long. The Trans-Siberian Highway is one of the longest national highways in the world along with the Trans-Canada Highway and Australia's Highway 1.
A major railway, known as the Eurasian Land Bridge allows goods to be transported from China and the EEU to Europe. An expansion of the original railway line named the New Eurasian Land Bridge provides an uninterrupted rail link between China and the EEU. Talks with China, India and Burma are ongoing to expand the railway network. In June 2014, it was announced that Russia, North Korea and South Korea would cooperate to expand the Eurasian Land Bridge to connect the peninsula. Advantages of exporting products by rail through the EEU are reduced shipping times and reduced costs. The railways also have the potential for expansion, with the future creation of high-speed railway lines being considered.
Single Eurasian Sky
The Single Eurasian Sky program, administered by the Eurasian Economic Commission, outlines the creation of a single market for air services and a single air traffic zone.The single air traffic zone would make it easier for airlines to draw up new flight paths, thereby increasing the number of flights flying through the region. Eurasian Commissioner, Daniyal Akhmetov, said that it would be created on a step-by-step basis. In June 2014, Belarusian Airline Belavia stated that it was ready to move towards the development of the single Eurasian sky. The terms and conditions of operation in the common aviation market have not yet to been agreed on. However the project is likely to be modeled on the European Union's Single European Sky. The project will reportedly help turn the airspace of the Eurasian Union into a popular transit hub between Europe and Southeast Asia. "We should understand that currently, the aviation companies of Kazakhstan and Belarus are not able to compete with Russia's aviation companies. Therefore, the program will envisage a phasing, creating a competitive environment and so on" Eurasian Commissioner Akhmetov said.
The Eurasian Economic Union is the top producer of sugar beet and sunflower, producing 18.6% of the world's sugar beet and 22.7% of the world's sunflowers in 2012, as well as a top producer of rye, barley, buckwheat, oats and sunflower seed. It is also a large producer of potatoes, wheat and grain (and grain legumes).
Part of the competences of the Eurasian Economic Commission are agriculture subsidies. It is responsible for the coordination of agricultural policy-making between member states and ensuring collective food security. The Eurasian Development Bank finances projects to further integration and develop agriculture. It has disbursed approximately US$470 million for projects between 2008 and 2013.
Projected economic impact
Member states remain optimistic of the union and key partners in the region, China, Iran, Turkey remain interested in it. Belief is that the Eurasian Economic Union has significant potential over the next two decades, with experts predicting a 25 percent growth in the member states' GDP by 2030, which equates to over US$600bn. The agreement will give member state citizens access to employment and education across the union. It will also entail collaborative policies in many sectors including agriculture, energy, technology and transportation. These collaborative policies are particularly interesting for countries in Asia seeking access to energy, trade routes in central Asia and Siberia, and agricultural goods.
Former president Dmitry Medvedev of Russia stated that both the positive and negative experiences of the European Union will be taken into account and argued that the Eurasian Union will avoid the problems of economic gaps and disparity between countries, such as found in the eurozone, since the member countries have a comparable level of economic development, as well as common history and values.
The European Union and the United States as well as other western countries remain critical of the Eurasian Economic Union, with analysts stating that without modernization and real economic reforms, the union will have little impact. The popular magazine The Economist stated that the advantages of joining the union remain unclear and further remarked "The agreement was vague, with technical details left unresolved, making it a political show rather than an economic one". Outlets have also stated that without Ukraine, the Eurasian Economic Union has lost a key member state necessary to the success of the union. Bloomberg's business magazine, Businessweek has affirmed that joining Putin's Eurasian Union looks like a bad deal, including for Russia. The union "won't really register on the radar of the global economy," said an analyst at the EU's Institute for Security Studies in Paris.
Vladimir Putin stated in November 2011 that the Eurasian Economic Union would build upon the "best values of the Soviet Union"; however, critics claimed that the drive towards integration aims to restore the "Soviet Empire".
Free trade agreements
Russia's economic development minister stated that the Turkish economic minister, Nihat Zeybekci, put forward an initiative for closer cooperation with the Eurasian Economic Union, including the formation of a free trade zone between the union and Turkey.
Vietnamese President Truong Tan Sang stated in July 2012 that Vietnam may join the Customs Union: "if there is a political will from our country's authorities, as well as Belarusian and Kazakh partners, we will soon be able to start this process". The Customs Union completed a free trade agreement (FTA) feasibility study for Vietnam in November 2012 and Russian Prime Minister Dmitry Medvedev stated in November 2012 that negotiations over the FTA will begin in early 2013. Vietnamese officials estimated in September 2012 that negotiations could take two years. Trade between Vietnam and the Customs Union in 2011 was 2.24 billion USD.
Russian President Vladimir Putin stated at a July 2014 meeting of ambassadors and permanent representatives of the Russian Federation that he was ready to discuss a free trade area between the European Union and the Eurasian Economic Union.
Pivot to Asia
The European Council of Foreign Relations and analysts suggest the Eurasian Union includes strategic interests as well as economic interests for its member states, especially Russia. Some experts see the union as a way to curtail the loss of Russian influence in Central Asia. Russian politicians have voiced their concerns over Russia’s long southern borders and the challenges it may pose. By creating a regional trading bloc to keep its neighbors in Central Asia stable, Russia hopes to find securing its own borders easier. In order to link both Europe and East Asia, Russia also seeks to develop its eastern regions to increase its access to Asian markets. Russia’s Far East has gained even more importance due to its proximity to alternative markets since the European Union and United States imposed sanctions on Russia following the crisis in Ukraine.
China’s rise as a major trading partner has been cited as a potential reason for Russia’s loss of control over Central Asian economies. The union is seen as a way to counterbalance China’s growing trade in Central Asia and the European Union’s Eastern Partnership.
As the trading bloc seeks to profit from the growing economies of East Asia, Russia has made steps to develop its eastern territories (Siberia and the Russian Far East). However the development of the Russian Far East may face difficulties due to Russia's traditional orientation towards Europe and the region's backward infrastructure and underdeveloped economy. In 2012 Russian President Vladimir Putin called for Russia to “catch the Chinese wind in the sails of the Russian economy”. During the same year, a Ministry for the Development of the Russian Far East was established and the country hosted a summit of the Asia-Pacific Economic Cooperation forum (APEC) in its eastern city of Vladivostok. The country also began striking deals and undertook massive efforts to improve infrastructure in its eastern territories. Russia’s pivot to Asia included the important task of creating of a Eurasian trading bloc. The countries seek to increase their competitiveness by sustaining domestic development and defending their interests in the region.
An estimated 76% of Russia’s exports depend on resources extracted (or manufactured) in Siberia. In order to transport goods from East Asia to Europe, they must be transported through Siberia by rail. Hence, the region plays an important role in trade, however it remains less developed than Russia’s western regions and modernization plans are ongoing. In 2013 the Russian government announced it would spend 450 billion roubles (USD$14 billion) for the modernization of the Trans-Siberian and Baikal-Amur railways. Russian President Vladimir Putin called the Trans-Siberian railway the country’s “strategically vital transport artery”. In July 2013 he stated “Rail freight traffic to our Far East ports has increased by 55 percent over the last 5 years and now comes to around 110 million tons a year”. Projects to upgrade stations at the border with Mongolia, China and North Korea were also undertaken the same year.
Neighboring country Kazakhstan has replicated Russia’s attempt to access East Asian markets. On September 2013, the presidents of China and Kazakhstan signed commercial deals and launched China’s “New Silk Road”. On 20 May 2014, both presidents announced they would link Kazakhstan’s railways to the Pacific Ocean by opening a new terminal in the Chinese port city of Lianyungang. China also signed agreements to make further investments in Kazakhstan’s energy sector. Both countries announced they would put aside US$1 billion to modernise an oil refinery in Shymkent and a further USD$150 million to open a new oil and gas plant near Almaty. The president of Kazakhstan also held talks with the heads of Chinese corporations and agreed to cooperate in the areas of aircraft production, telecommunication and mining.
The members of the union agreed to step up talks with Vietnam on creating a free trade zone, to strengthen cooperation with China, including in information exchange on goods and services, and to set up expert groups to develop preferential trade regimes with Israel and India.
The combined population of all member states was forecast to be 182,519,270 in 2014.
The Eurasian Economic Union has 17 cities with more than 1 million inhabitants, the largest being Moscow. The most densely populated areas are the capital cities of member states, and European Russia. Siberia is the region with the least inhabitants. In Russia about 160 different ethnic groups and indigenous peoples live within its borders. Kazakhstan and Belarus are home to sizable ethnic Russian minorities. Though the member states of the Eurasian Economic Union's populations are comparatively large, its density is low because of the enormous size of Russia and Kazakhstan. The Eurasian Economic Union's average birth rate in 2010 was roughly 12.5 births per 1000 people, higher than the European Union, which has an average of 9.90 births per 1000 people.
The Eurasian Economic Union must negotiate as a whole to sign free trade agreements with other countries. Key players for the Eurasian Economic Union are the European Union, Turkey, Iran, China and the Korean peninsula. The EEU has sought to increase its trade with partners in the Middle East and East Asia, in order to profit from the growing trade between Europe and Asia.
Tensions with the European Union in 2014 have increased both unions to pressure post-soviet states to join their integration unions. Both sides have accused the other of carving spheres of influence. Members of the union, especially Russia have tried to diversify their trade by signing economic agreements with China, Iran and Turkey. Trade with North and South Korea has also risen.
A rising China has been increasingly interested in Central Asia and the Eurasian Economic Union. Analysts see the union as a potential way China could facilitate its investments in the region. Historically, China held close economic ties with many countries throughout Eurasia. Under the Han Dynasty, its trade routes extended to the Roman Empire. The Economy of the Han Dynasty and other subsequent dynasties exchanged numerous goods with countries throughout Europe and Asia. Both China and the union have stated they would benefit from recreating trade routes modeled on the historic Silk Road.
Railways transport goods from China to the European Union through Kazakhstan and Russia. The country has pushed for the construction of more railway lines to connect Berlin to east China to reduce shipping time. It proposed major high-speed railway lines going towards Europe via Russia and Kazakhstan and another through the Middle East via Tajikistan, a potential future member for the union. China has signed numerous energy deals with Russia and Kazakhstan, as it tries to move from coal to less pollutant alternatives.
Iran has sought to diversify its economy as well, seeing the EEU and China as key economic partners. Relations between Russia and Iran have increased as both countries are under U.S. sanctions and are seeking new trade partners. Both countries signed a historic US$20 billion energy deal.
Kazakhstan seeks to enhance its ties with Turkey, a key player in the region. In July 2014, Turkey announced closer economic ties with the EEU, including a possible free trade agreement in the near future.
Armenia and Nagorno-Karabakh
In September 2013 Armenia announced its intentions of joining the Customs Union of Belarus, Kazakhstan and Russia. The region of Nagorno-Karabakh however is disputed between Armenia and Azerbaijan. Tensions have risen in the Caucasus region on July 30, 2014 due to clashes between Armenian and Azerbaijani soldiers.
Experts estimate that with an accession of Armenia, the internationally unrecognized Nagorno-Karabakh Republic would not be integrated into the Eurasian Union. Armenia is a permanent political, military and economic ally of Russia, whereas Azerbaijan holds close ties with the west. The Kazakh President Nursultan Nazarbayev expressed concern in 2013 that no reliable customs border between Armenia and Nagorno-Karabakh could be drawn. However, Nazarbayev expressed that he holds all the existing disagreements preventing Armenia's integration into Eurasian Economic Union are surmountable. The Chairman of the Foreign Policy Committee in the Armenian Parliament, Artak Zakarian, announced on 14 May 2014 that Armenia will build no customs border including the region of Nagorno-Karabakh.
Uzbekistan, Tajikistan and Kyrgyzstan
When Russia's Gazprom bought the gas network of neighboring country, Kyrgyzstan, pledging "a stable gas supply", Uzbekistan subsequently cut off its gas exports to Kyrgyzstan's south stating that it had no contracts to sell gas to Gazprom. The cut off happened as Uzbek president, Islam Karimov protested Russia's growing presence in the region. The shut-off has left hundreds of thousands in south Kyrgyzstan without gas. The president of Kyrgyzstan has since promised to build a new gas pipeline to the country's south, bypassing Uzbekistan. Negotiations to solve the crisis are ongoing. Nevertheless, Kyrgyzstan's president announced the country would pursue integration and continue on its path to join the Eurasian Economic Union.
Previously, Tajikistan was on track to become a potential member of the union, having signed the treaty on the Eurasian Customs Union and the Single Economic Space. However, due to border disputes between Kyrgyzstan and Tajikistan, the integration process in Tajikistan country has stalled. Both countries exchanged fire in December 2013 and August 2014, resulting in casualties.
Tensions between the EEU and the European Union (EU) occurred as both have sought to deepen their ties with several former Soviet republics. The EU signed free trade agreements with Ukraine, Moldova and Georgia, however separatists in all three countries back closer ties with Russia. Russia pressured Ukraine not to sign or ratify a free trade agreement with the EU, and supported separatists in Eastern Ukraine after their annexation of the Crimean peninsula. In response, some member states of the European Union have sought to find alternatives to Russian gas, while others have voiced their support for the construction of the South Stream pipeline which circumvents Ukraine. Analysts believe Russia backs the Eurasia Economic Union in order to limit western influence in the region.
Western analysts generally see the Eurasian Economic Union as a way to reunite many of the former Soviet republics. For example, Washington Post author Abigail Hauslohner wrote the treaty was intended "to further bolster [Russia]'s ties to former Soviet republics." The United States expressed its opposition to the Eurasian Union, claiming it is "an attempt" to re-establish a USSR-type union among the former Soviet republics. In December 2012, former Secretary of State Hillary Clinton claimed "It's not going to be called that [Soviet Union]. It's going to be called customs union, it will be called the Eurasian Union and all of that, but let's make no mistake about it. We know what the goal is and we are trying to figure out effective ways to slow down or prevent it".
Kazakhstan president Nursultan Nazarbayev called it "a hard-won achievement," and "a blessing for our people." However, not all Kazakh citizens were happy about the agreement; dozens of people protesting the agreement were arrested in the nation's capital after it was signed.
India, Israel, New Zealand, Turkey, and Vietnam were among the countries that quickly expressed a desire to form trade agreements with the new Eurasian Economic Union after the treaty was signed.
Existing integration projects
The Eurasian Economic Community customs union has already brought partial economic integration between the three states, and the Eurasian Economic Union is said to be a continuation of this customs union. However, the impact of that agreement is unclear – trade between the three states actually fell 13% during the agreement's first year.
A number of other regional organisations also provide the basis for further integration: the Union State of Russia and Belarus; the Eurasian Economic Community of Russia, Belarus, and Kazakhstan; the Collective Security Treaty Organisation, consisting of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan; and the Commonwealth of Independent States comprising most of the post-Soviet countries.
- Putin Confirms Armenia’s Entry to Eurasian Union
- Putin signs Armenia’s Eurasian Union deal
- Russia wants to see Tajikistan in Eurasian Economic Union
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В случае успешного расширения использования национальных валют России, Белоруссии и Казахстана, создания единой платежной системы может быть поднят вопрос о переходе к единой валюте, пишет «Российская газета».
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This Asian vector of Russian domestic and foreign policy is now becoming even more important as the European Union and the United States impose sanctions on Russia. The Russian Far East, with its proximity to Asia, could become the new backbone of the Russian economy
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First of all, I am convinced that China's economic growth is by no means a threat, but a challenge that carries colossal potential for business cooperation - a chance to catch the Chinese wind in the sails of our economy. We should seek to more actively form new cooperative ties, combining the technological and productive capabilities of our two countries and tapping China's potential - judiciously, of course - in order to develop the economy of Siberia and the Russian Far East.
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He said the creation by 2015 of a Eurasian Economic Union was the most important task facing Russia in its “near abroad”.
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