Eurasian Economic Union: The rocky road to integration

Briefing 20-04-2017

Since the 1991 breakup of the Soviet Union, various attempts have been made to re-integrate the economies of its former republics. However, little progress was made until Russia, Belarus and Kazakhstan launched a Customs Union in 2010. In 2015, this was upgraded to a Eurasian Economic Union (EEU). Modelled in part on the EU, this bloc aims to create an EU-style Eurasian internal market, with free movement of goods, services, persons and capital. So far, the EEU's performance has been poor. Trade has slumped; this has more to do with Russia's economic downturn than the effects of economic integration, but there are signs that the new bloc is favouring protectionism over openness to global trade, which in the long term could harm competitiveness. Especially following the showdown between the EU and Russia over Ukraine, the EEU is widely seen in the West as a geopolitical instrument to consolidate Russia's post-Soviet sphere of influence. Fear of Russian domination and trade disputes between EEU member states are hindering progress towards the EEU's economic objectives. However, prospects may improve when Russia comes out of recession. The EEU is developing relations with third countries, such as Vietnam, which in 2015 became the first to sign a free-trade agreement with the bloc. For its part, the EU has declined to recognise the EEU as a legitimate partner until Russia meets its commitments under the Minsk agreements to help end the conflict in eastern Ukraine.