How this little-known Eurasian economic bloc helped blunt Western sanctions

By Timofey Bordachev, Program Director of the Valdai Club

The rumble of guns is now so loud across the world that it’s easy to forget that there can be any relationship between states other than ones based on brute force. But that is not the case.

However fierce the contradictions between the great powers may be, international politics and economics are not all about conflict. There is always room for cooperation, which is no less natural to human nature than competition and coercion. And it would be a mistake to ‘fall for’ the West’s suggestion that the benefits are only one-sided – it is not necessarily the case. It only becomes so if the US and its Western European satellites initially see cooperation as a one-way street. The opposite is true, in reality. And it even produces quite tangible results.

Against the backdrop of dramatic events in the zone of direct confrontation between Russia and the West, the ten-year anniversary of a unique organization uniting five countries of the former USSR went virtually unnoticed by observers. We are talking about the Eurasian Economic Union (EAEU), whose founding treaty was signed in Astana in May 2014.

During those days, when Ukraine was sinking deeper and deeper into the abyss of civil war, the leaders of Belarus, Kazakhstan and Russia created an association of states with the main purpose of creating favorable conditions for business. To think that this was premature in the circumstances of the growing global crisis is to distrust the strategic intentions of the three most experienced politicians of their time.

This is first and foremost because no conflict, even the most violent, should lead to the freezing of all other life. We in Russia have already seen this for ourselves during two years of confrontation with the West in Ukraine. The efforts of a modern state cannot be focused only on violent confrontation – because then it risks losing the time needed for development. Moreover, in the context of growing pressure from the US and EU on Russia’s position in Eastern Europe, the creation of a purely economic union was a bold, asymmetric response to this challenge.

The EAEU is first and foremost an experiment in organizing a fundamentally new way of life on a large scale. We have never tried anything like it before and, luckily, we took the risk. So far, the experiment is working and has already passed two serious tests: the Covid pandemic and a barrage of Western sanctions against the EAEU’s largest economy, Russia.

Initially, however, the feasibility of the project was questionable. After the collapse of the USSR in 1991, any close cooperation between Russia and its other former republics was seen as having only two alternatives: a mechanism for civilized divorce or a way of restoring a unified state.

This view partly reflected a lack of experience of relations other than the subordination of all to a single vertical of power. Another possible option for relations between Russia and its neighbors was seen only as mutual rejection on the way to building isolated nation-states. The West’s assessments and recommendations had actively contributed to making this the way forward. The US-led group has always been interested in hostility between other countries of the world. And they’ve tried to instil the idea of its inevitability into everyone’s consciousness. We have to admit that they were quite successful.

That is why the EU and the US have never recognized the EAEU and refuse to engage in direct dialogue with it. Unlike China, which signed a cooperation agreement in 2015. The reason is that the West immediately sensed in the EAEU the most dangerous thing possible for the implementation of its plans – that there could be solutions other than those offered to the world by Washington and Brussels. In the long run, this is even worse for the West than political disagreements, simply because an essential part of its power lies in the absence of any choice for other states.

As soon as such options appear and work out, the West’s fascination disappears. The most vivid example is modern Georgia, which has gone from being a pariah country to a fairly reliable participant in Eurasian economic relations.

Since the creation of the EAEU, mutual trade between its member countries has almost doubled, and their foreign trade has grown by 60%. Industrial production has increased by 22% and agricultural production by 25%. At the same time, investment in fixed capital has increased by a third, and the volume of bilateral settlements in national currencies has reached 90% in recent years. All this shows that, despite its imperfections, the degree of mutual opening of the markets of the EAEU countries in just ten years has become necessary for the development of their national economies.

The most impressive growth rates, directly related to participation in the EAEU common market, have been achieved by Armenia and Kyrgyzstan – small service economies. Like the Netherlands in Western Europe, they fulfil the functions of intermediate countries. Especially after the beginning of the Western economic war against Russia and Belarus, this type of activity has become the most in demand. In Armenia, GDP grew at a record rate of 11-13% in 2022-2023, and Kyrgyzstan set new records.

With few exceptions, the openness of the markets creates reasons for Russia’s EAEU partners to be more resistant to Western pressure to support sanctions. Pressure can be successful in areas where the West dominates the financial infrastructure. But in cases where the open market operates, it becomes completely powerless.

There has been particularly impressive growth in trade between these countries and those partners in Europe with whom Russia has virtually cut off economic relations. The current Armenian government cannot be considered pro-Russian at all, and there is room for serious misunderstandings in our relations. But no one is even considering the possibility of voluntarily curtailing economic ties. And the longer the relationship is driven by market logic rather than politics, the more dangerous it will be for any government to take drastic steps.

In other words, the practice of Eurasian integration has shown that the quiet work of officials can be a very effective weapon against the West’s attempts to isolate everyone. And it is completely superfluous to speculate now on how long and geographically large the integration project will be in the future. Eurasian integration has already existed for ten years and is bringing tangible economic benefits to its participants. Let us repeat: the benefits are now, not in the “bright future” that the European Union promises to the countries that depend on it.

This is the difference between a forward-looking model of development and a dead-end one: the former focuses on the outcome now, while the latter is based on the probability of complete happiness and prosperity sometime in the future. The second path has, as we know, been taken by Ukraine, where every coup d’état – and the resultant bloodshed – has been driven by the promise that something delightful lies ahead. The result is obvious. The other way is to work patiently to increase the number of people who personally benefit from good rather than bad relations between countries.

This article was first published by ‘Vzglyad’ newspaper and was translated and edited by the RT team.