Thursday, January 8, 2015

Eurasian Economic Union comes into force at beginning of 2015

On January 1, the Eurasian Economic Union(EEU) came into force, linking Russia, Belarus, Kazakhstan and now Armenia as well.


In part the Eurasian Economic Union is meant as a counterbalance to the European Union. So far members consist of Russia and some former members of the USSR who are now independent. Armenia officially joined on Friday. However, in a deal signed back in October, Armenia will have limited representation in the EEU until the end of 2015. Another former Soviet republic, Kyrgyzstan, will join on May 1 this year.
 Unlike Ukraine, the Armenian government decided against closer ties to the EU back in 2013 and opted instead to join the Customs Union created by Russia which was a precursor to the EEU. The Customs Union was formed on January 1 2010 and consisted of Russia, Belarus, and Kazakhstan. Trade economist Alexander Knobel claims that Armenia chose to join the Union after Russia offered a bargain price of $170 to $180 per thousand cubic meters of natural gas. 
Russia has the largest foreign investment in Armenia and is the largest trading partner as well. Since Ukraine has turned to the west, Putin is looking to use the EEU to create a larger economic unit that will see Russia as the dominant member. Analyst, Lilit Gevorgyan of IHS Global Insight said: "Having lost Ukraine, Central Asia will be much more sought after by Moscow in striking its integration plans" 
The Kazakhstan president, Nazarbayev, has been a big supporter of the increased economic integration involving Russia although he has also been clear that Kazakhstan will remain independent politically. Aidos Sarym, a political analyst based in Almaty, Kazakhstan said: "In our region, we have Kazakhstan, we have China and we have 7,000 kilometers of common border with Russia, so naturally you will not find a single sober-minded person in this country saying that he will not cooperate with Russia. The question is — how to do it and on what terms." The Kazakhstan president has pursued what he terms a "multi-vector foreign policy" that attempts to develop positive economic relations with Russia, China, and the West as well. He does not see the EEU as Russia extending its empire but as being similar to the EU.

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