Russia’s Duma ratifies Eurasian Economic Union

September 27, 2014

Today saw the Russian Duma ratify Eurasian Economic Union – the wannabe regional challenger to the European Union, at least in part.

Like the EU, it is supposed to be built upon the overarching principles of free movement of goods, services, labour and capital – as far as the economics of block status go.  How that will sit with the “Russia for Russians” nationalist rhetoric remains to be seen when it comes into force.

Belarus and Kazakhstan are expected to ratify their entry into the EEU in the near future, with the entity EEU agreement coming into force from 1st January 2015.

The EEU also differs in some significant ways to the EU, to the point where the EEU agreement is completely incompatible with the EU DCFTA’s recently ratified by Ukraine, Moldova and Georgia.

The EU DCFTAs ratified by Ukraine, Moldova and Georgia fit together far better with the existing Confederation of Independent States FTA, and a few nuanced teaks of that CIS FTA would have allowed for a very reasonable fit.  Whether that will now comes to pass seems unlikely in a world where The Kremlin operates on zero sum.

The original CIS FTA comprised of ratified signatories, Russia, Belarus, Kazakhstan, Ukraine, Moldova and Armenia, with Kyrgyzstan and Tajikistan signatories that remain without national ratification.  The other CIS nations, Azerbaijan, Turkmenistan and Uzbekistan have never signed nor sought membership of the CIS FTA.

Thus on one side there is now Ukraine, Georgia and Moldova with ratified DCFTAs with the EU – and Russia, with Belarus and Kazakhstan soon to follow, with ratified EEU agreements.

Armenia, it has to be said, is currently under extreme Kremlin pressure to join the EEU despite considerable resistance within its society and the political class.  It is clearly the next Kremlin target for assimilation within the EEU, with “No” not being an acceptable answer.

Whether Kyrgyzstan and Tajikistan will eventually join remains to be seen.  Kyrgyzstan has a mere 300 plus issues with the EEU with which it is trying to lodge reservation (exemption) against within EEU treaty.  (Armenia 900 plus).    It may after all ratify the CIS FTA.  That said, The Kremlin will want to see its new entity expand and be seen to be attractive – even if members are actually bullied into joining.

Azerbaijan is currently plainly not interested in any such agreement with either the EU or the EEU.  Thus whilst there may be the usual manifestations of the resource curse for democracy and human rights, that oil and gas as far as the Azerbaijani leadership is concerned, is sufficient not to want binding block trade deals with anybody.  Turkmenistan and Uzbekistan currently do not appear overly enthused with the idea either.

The question therefore arises, what eventually becomes of the CIS FTA?

At the start of the New Year, 3 ratified signatories with EU DCFTAs remain ratified signatories of the CIS FTA.  Another 3 ratified signatories become ratified signatories of the new EEU.  Kyrgyzstan and Tajikistan will still be ratified to no trade agreements whatsoever.

Armenia, as a ratified CIS FTA signatory will probably be forced into applying to join the EEU, but is unlikely to ratify its membership before the EEU comes into being.

The CIS FTA therefore either becomes a poor relative of the EEU agreements for some nations, or it becomes the bridge between both EU DCFTA and EEU agreements at a somewhat lesser level for those ratified to both.  In doing so it maintains the existing legislative regional trade infrastructure for all current ratified signatories in some shape or from,  as it cannot just be scrapped as a legal instrument as long as two or more ratified signatories intend to use it as a legal basis for their trade.  Moldova and Ukraine for example.  Indeed they may have good reason to deliberately keep it alive, even if it became somewhat hollowed out as EEU nations give notice to leave the CIS FTA agreement.

Will the CIS FTA be put to the sword, allowed to stagger on, or be deliberately kept alive by the EU DCFTA ratifying nations as the platform for their trade relations – which would deliberately irk The Kremlin if it wanted to kill it off.

Whatever the case, if there was ever any doubt that the EEU would come in to being, the ratification by the Duma today, has removed whatever doubt that was left.

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