Eurasian Economic Union: a Project to Fulfill the Needs of Russia or a Catalyst for Effective Integration?

The signing of the Treaty on the Eurasian Economic Union in Astana on May 29, 2014, became one of the most notable events of that year. Creators of the union and supporters of the post-Soviet integration assessed the document as a historic step in creating a powerful regional bloc that could compete with the most successful integration associations in the world. Skeptics erupted in a flood of comments justifying the impossibility of that integration. Some argued that this is a hopeless attempt to imitate the European Union. 

This study attempts to uncover the critique regarding the EAEU and its main executive body Eurasian Economic Commission (EEC), to examine that while it is autonomous de jure, it is not de facto, and to identify who rules the union.

What is wrong with Eurasian Economic Commission?

The Eurasian Economic Commission as the main executive body of the EAEU, on the one hand, is considered a promoter of further economic integration within the union; on the other hand, the Commission is criticized for being ineffective. While according to Treaties, the EEC has legal and executive powers, in fact, its powers are much more limited than those of the other bodies of the EAEU, and here is why. 

The institutional structure of the EAEU represents a hierarchy, where a higher institution can override decisions of the lower one: the decisions made by the Board are the least important in the hierarchy. Additionally, the autocratic member-states, especially Russia, tend to pull national interests as strongly as to veto any decisions that do not fit their preferences. In five years, seven decisions of the Board of the Commission were vetoed by member states if they were contradicting their national interests or national law. More to that, the EAEU was affected by the unilateral actions of the Russian Federation: applying trade restrictions on third parties without an agreement with the union, banning the imports of goods from the EU, banning agricultural goods from Turkey, and a food embargo to Ukraine. 

Is Russia a Hegemon within the EAEU?

From the very creation of the EAEU, Russia, in the role of a founder of the Union, was described as a key player both in promoting and restricting the integration in the region. The Eurasian Economic Commission was assumed to be an agent for Russia to push their interests and delegate the power to promote them. These interests, unlike those of Belarus and Kazakhstan, are not economic but geopolitical.

Moreover, the EEC is based in Moscow with Russian as a working language, and Russian officials already dominate the staff of the Commission, the executive and de facto most important body of the EAEU. Russia, as a separate state, more prevalent economically and militarily, causes concerns for weaker member-states. For instance, the economic survival of such states as Belarus and Armenia depends on the subsidies and security assurance from Russia, while for Kazakhstan, Russia is the source of transit corridors and a huge market with a population of 144.5 million people.

In 2012, the Board of the Commission adopted Decision No.160 pursuing cancellation by Russia of exemptions from the national regime concerning Belorussian goods “On establishing additional requirements for participants when placing orders for the supply of clothing property for the needs of federal executive bodies.’. This decision was vetoed by the Russian Federation and all new requirements have been staying in place. 

In 2015, the EEC Board adopted Decision No.81 on the need to revoke certain orders of the Russian Government in the field of state procurements as a result of which the access for EAEU member-states goods and suppliers to the public procurement market was limited. For unstated reasons, the Russian Federation successfully blocked this decision of the Board, while protecting its domestic manufacturing sectors. 

In 2017, the EEC’s decision stated that Russia’s metallurgical combine “Novolipetsk ” and VIZ-Steel violated competition rules. Russia introduced new discriminatory conditions for the export of electrotechnical steel to Belarus and Kazakhstan. The decision proposed by the EEC was to fine Russia for 3.5 million dollars. However, this decision was suspended as a result of the initiation of appeal by the Russian Federation. 

In June 2018, the EEC introduced the new rules, according to which the Commission is empowered to issue proposals in case of detection of possible signs of violations of the general rules of competition in cross-border markets. Instead of solving the problem of non-compliance, however, the new decision gave more freedom to member-states, and Russia especially, to not to comply with the Treaty provisions without fear of being punished by sanctions. Moreover, the Constitutional Court of the Russian Federation has a legal mandate to rule on the conformity of the EEC’s decisions with the Constitution. 

At the level of the Eurasian Economic Commission, the economic-integration-oriented goals of the EAEU conflict with member-states interests driven by the protection of domestic sectors and economic sovereignty. Balancing between Russian interests as a hegemon and the collective decision-making within the framework of the EAEU is the main task of the EAEU bureaucrats. The autonomy of the EEC is bound by those conflicting interests which are expressed through veto of all the key member-states and unilateral decision-making of Russia.  

Prepared by Darina Zhunussova, September 27, 2022.

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