Proposal

In the 1990s, Russia and the Central Asian republics were weakened economically and faced declines in GDP as a result of the collapse of the Soviet Union. The member states of the union underwent economic reforms and privatisation.^{[journal 1][17]} The process of Eurasian integration began immediately after the break-up of the Soviet Union. When the USSR began to fall in 1991, the presidents of Belarus, Kazakhstan and Russia^{[journal 2]} of the founding republics signed the Belavezha Accords on 8 December 1991, declaring that the Soviet Union would cease to exist and proclaimed the Commonwealth of Independent States in its place.

In 1994, during a speech at Moscow State University, the first President of Kazakhstan, Nursultan Nazarbayev, suggested the idea of creating a "Eurasian Union" as a regional trade bloc in order to connect to and profit from the growing economies of Europe and East Asia. The vision would be to simplify the free flow of goods across Eurasia.^[18][19][20] The idea was quickly seen as a way to bolster trade, boost investment in Central Asia, Armenia and Belarus, and serve as a complement to the Eastern Partnership.^[19][21]

Founding treaties (1990s)

During the 1990s, the Eurasian integration process was slow, possibly due to the economic crisis experienced after the dissolution of the Soviet Union and the size of the countries involved (Russia, Belarus and Kazakhstan cover an area of about 20 million km²). As a result, numerous treaties have been signed by member states to establish the regional trade bloc gradually.^{[journal 3][journal 2]}

In 1995, Belarus, Kazakhstan, Russia, and later acceding states Kyrgyzstan and Tajikistan signed the first agreements on the establishment of a Customs Union. Its purpose was to gradually lead the way toward the creation of open borders without passport controls between member states.^[22]

In 1996, Belarus, Kazakhstan, Russia and Kyrgyzstan signed the Treaty on Increased Integration in the Economic and Humanitarian Fields to begin economic integration between countries to allow for the creation of common markets for goods, services, capital, labour, and developing single transport, energy and information systems.^{[journal 2][23]}

In 1999, Belarus, Kazakhstan, Russia, Kyrgyzstan and Tajikistan signed the Treaty on the Customs Union and the Single Economic Space by clarifying the goals and policies the states would undertake in order to form the Eurasian Customs Union and the Single Economic Space.^[24][25]

Eurasian Economic Community (2000–2014)

To promote further economic integration and more cooperation, in 2000 Belarus, Kazakhstan, Russia, Kyrgyzstan and Tajikistan established the Eurasian Economic Community (EurAsEC) which Uzbekistan joined in 2006. The treaty established a common market for its member states. The Eurasian Economic Community was modelled on the European Economic Community.^[26] The two had a comparable population size of 171 million and 169 million, respectively.

A Treaty on a Single Economic Space by Belarus, Kazakhstan, Russia and Ukraine was signed in 2003 and ratified in 2004, but the process was stalled after the Orange revolution.^[27][28]

In 2007, Belarus, Kazakhstan and Russia signed an agreement to create a Customs Union between the three countries.^[29]

Establishing the customs union and single market (2010–2014)

The Customs Union of Belarus, Kazakhstan, and Russia (now the Eurasian Customs Union) came into existence on 1 January 2010.^[30] The Customs Union's priorities were the elimination of intra-bloc tariffs, establishing a common external tariff policy and the elimination of non-tariff barriers. It was launched as a first step towards forming a broader single market inspired by the European Union, with the objective of forming an alliance between former Soviet states.^[31] The member states planned to continue with economic integration and were set to remove all customs borders between each other after July 2011.

On 1 January 2012, the three states established the Eurasian Economic Space which ensures the effective functioning of a single market for goods, services, capital and labour, and to establish coherent industrial, transport, energy and agricultural policies.^[32][33] The agreement included a roadmap for future integration and established the Eurasian Economic Commission (modelled on the European Commission).^[34][35] The Eurasian Economic Commission serves as the regulatory agency for the Eurasian Customs Union, the Single Economic Space and the Eurasian Economic Union.^[32]

Treaty on the Eurasian Economic Union

In 2011, the then-Prime Minister of Russia, Vladimir Putin, announced his support for Nursultan Nazarbayev's idea for the creation of a Eurasian Economic Union.^[36][37] On 18 November 2011, the presidents of Belarus, Kazakhstan, and Russia signed an agreement setting a target of establishing the Eurasian Economic Union by 2015.^[34] The member states put together a joint commission on fostering closer economic ties.^[32][38]

On 29 May 2014, the presidents of Kazakhstan, Belarus and Russia signed the treaty on the Eurasian Economic Union, which came into effect on 1 January 2015. The presidents of Armenia and Kyrgyzstan were also present at the signing ceremony. Russian president Vladimir Putin stated, "Today we have created a powerful, attractive centre of economic development, a big regional market that unites more than 170 million people."^[39] Kazakh politicians emphasized the Eurasian Economic Union was not intended to be a political bloc, but a purely economic union.^[39] Bakytzhan Sagintayev, the first deputy prime minister of Kazakhstan and lead negotiator, said, "We are not creating a political organisation; we are forming a purely economic union." He further stated "it is a pragmatic means to get benefits. We don't meddle into what Russia is doing politically, and they cannot tell us what foreign policy to pursue."^[39] By October, the treaty had received parliamentary approval from all three states.^[40] On 9 October 2014, a Treaty to enlarge the EAEU to Armenia was signed.^[41][42] Kyrgyzstan signed the Treaty on 23 December 2014 and became a member of the Eurasian Union on 6 August 2015.^[43][44]

Structural evolution

Russian invasion of Ukraine (2022)

As a result of Russia's invasion of Ukraine, the US and EU placed sanctions upon Russia and Belarus.^[45] On 10 March 2022, Russia suspended exports of wheat, meslin, rye, barley, and corn to the Eurasian Economic Union to secure the country's food supplies.^[46] The ban was reversed on 1 April 2022, although other restrictions on the trade of foods were simultaneously introduced.^[47] On 29 March a Kazakh government official stated that Kazakhstan would abide by US and EU sanctions and would not facilitate any circumvention, despite its membership of the EAEU. The official explained that Kazakhstan does not wish to be targeted by secondary sanctions, and instead will be seeking to expand its cooperation with the EU.^[45]

On 15 December 2023, the EAEU signed a free trade agreement with Iran that will eliminate customs duties on almost 90% of goods. The agreement serves to replace a similar temporary agreement that has been in force since 2019.^[48]

Presidency

Each year, a Member State is elected chairman to head the Union. Chairmanship is passed from country to country in alphabetical order in the Russian language. Armenia currently holds the chairmanship.

More information Year, # ...

Year	#	Country	Head of state or government	Major trade agreements
2015	1st	Belarus[64]	Alexander Lukashenko	Vietnam
2016	2nd	Kazakhstan[65]	Nursultan Nazarbayev	none
2017	3rd	Kyrgyzstan[66][67]	Almazbek Atambayev (until 1 December)
			Sooronbay Jeenbekov (from 1 December)
2018	4th	Russia[68]	Vladimir Putin	China,  Iran
2019	5th	Armenia[69]	Nikol Pashinyan	Serbia,[70]  Singapore[71]
2020	6th	Belarus[72]	Alexander Lukashenko
2021	7th	Kazakhstan	Kassym-Jomart Tokayev
2022	8th	Kyrgyzstan	Sadyr Japarov
2023	9th	Russia	Vladimir Putin
2024	10th	Armenia	Nikol Pashinyan
2025	11th	Belarus	Alexander Lukashenko

Close

Enlargement

Russian President Vladimir Putin has stated that Russia's goal was to enlarge the Customs Union to all post-Soviet states, excluding the three Baltic EU member states.^[73] According to The Guardian newspaper, Russia's plan is for the Eurasian Union to grow into a "powerful, supra-national union" of sovereign states like the European Union, uniting economies, legal systems, customs services, and military capabilities to form a bridge between Europe and Asia to balance the EU and the U.S.^[74]

In May 2015, an integration agreement was signed between the Russian Federation and South Ossetia. If South Ossetia were to join, it would be by acceding to the Russian Federation^{[citation needed]}. In 2023, South Ossetia began implementing and integrating the EAEU's common tariffs.^[75]

Tajikistan was formally invited to join the union and has expressed its interest in acceding.^{[76][77][78][79]} It is recognized as a potential candidate and membership negotiations are underway.^{[78][79][80][81]} In 2015, further efforts were made to integrate Tajikistan into the EAEU.^[82][83]

Uzbekistan has been hesitant to join the Economic Union, with Uzbek officials making opposing claims on the prospect of integration.^[85][86] Originally, the country preferred not to pursue economic and political integration.^[87][88][89] Russian officials have stated that integration with the country would be slow and analysts state that as Russian influence and trade increases in Kyrgyzstan and Tajikistan it may persuade Uzbekistan to join in the future.^[90] Uzbekistan began its integration process when Russia announced it would write off US$865 million off debt owed by the country. Uzbekistan joined the Commonwealth of Independent States Free Trade Area in 2014, meaning it has free trade with EAEU member states.^[91][92][93] According to some sources, Uzbekistan does not intend to become a full member of the EAEU,^[94] due to Uzbekistan's neutrality which is enshrined in the country's legislation. In March 2020, Uzbekistan announced that it wished to become a Eurasian Union observer state.^[95] In September 2023, Uzbekistan estimated that it will join EAEU in 2–3 years.^[96] In October 2024, the chair of a parliamentary commission examining the potential for Uzbekistan to join the EAEU as a full member stated that "our conclusion is that Uzbekistan is best served by maintaining its observer status."^[97]

Moldova, Ukraine and Georgia have been offered by both the European Union and the Eurasian Economic Union to join their integration unions. All three countries signed Association Agreements with the EU on 21 March 2014.^[98] However, break-away regions of Moldova (Transnistria),^[99] Ukraine (Donetsk and Luhansk)^{[citation needed]} and Georgia (South Ossetia and Abkhazia)^{[citation needed]} have expressed a desire to join the Eurasian Customs Union and integrate into the Eurasian Economic Union. Association Agreements with the EU are exclusionary to EAEU observer status, as in 2017 Moldova became the EAEU's first observer state and has attended EAEU forums in years since.

Ukraine submitted an application to participate in the Eurasian Economic Union as an observer in August 2013.^[100] Viktor Yanukovych's decision to abandon an association agreement with the European Union and exclusively pursue integration with the EAEU was a key factor in the Euromaidan protests that ended his term as president of Ukraine followed by annexation of Crimea by Russia. The country's membership in the EAEU was seen by some analysts as the key to the success of the union as Ukraine has the second largest economy of any of the 15 former republics of the Soviet Union. With high tensions between Russia and Ukraine in the wake of the crisis, Ukraine decided to pursue integration with the EU.^[101]

Turkey was extended an invitation to join the EAEU by Kazakhstan's President Nursultan Nazarbayev on 6 June 2014 but the country prefers to join the EU.^[102]

Georgia's Prime Minister Bidzina Ivanishvili said in September 2013 he was studying the possibility of acceding to the Union, although he later clarified that Georgia's main strategy was still to integrate into the European Union.^[103][104] Russia's Prime Minister Dmitri Medvedev included Georgia as a prospective member in statements made in August 2013.^[105]

The member states of the EAEU have reached an agreement with China to conjunct the EAEU with the Belt and Road Initiative, opting for collaboration instead of competition.^[106] It is important to note that there is also significant cooperation between the EAEU and China in the areas of high technology and digitalization.^[107]

Supreme Eurasian Economic Council

The Supreme Council, which is composed by the heads of state of the member states, makes important decisions for the union. It approves the budget and the distribution of the contribution of the Member States. The Supreme Council also determines the strategy, direction and prospects of integration and takes decisions aimed at achieving the goals of the union.^{[109][110][111][112]}

Eurasian Economic Commission

The Eurasian Commission was established as the supranational governing body of the Eurasian Economic Space on 1 January 2012.^[35] The commission was modelled on the European Commission.^[34] Its headquarters are in Moscow.^{[journal 2]} The commission monitors subordinate branches and advisory bodies. Its departments were greatly expanded on 1 January 2015, and the number of international employees increased from 150 to 1,200.

The Eurasian Commission can take decisions on not only the customs policy of the union, but also on the macro-economy, the competition regulations, the energy policy and the fiscal policy of the Eurasian Economic Union. It has strict anti-corruption laws.^[113]

The Eurasian Economic Commission consists of two bodies: the Council and the Collegium.

Parliament

As of 2015, the EAEU has no directly or indirectly elected body. In 2012, the creation of a Eurasian parliament was under consideration.^[115][116] However, it was considered too premature, and member states have instead begun harmonising national laws and legal codes.^[117]

Russian president Vladimir Putin has upheld the idea of creating a parliament for the union.^[118]

Court of the Eurasian Economic Union

The Court of the Eurasian Economic Union replaced the Court of the Eurasian Economic Community (EurAsEC Court) in 2015. It is in charge of dispute resolution and the interpretation of the legal order within the Eurasian Economic Union. Its headquarters is in Minsk.^[119] The court is composed of two judges from each member state, appointed by the heads of government of the member states. Their term of office is nine years.^{[109][110][111][112]}

Budget

The approved budget of the Eurasian Economic Union for 2015 exceeds 6.6 billion Russian roubles.^{[120][121][122]} The budget is formed from contributions by the union's member states. In 2015, 6 billion roubles will be allocated for the activity of the Eurasian Economic Commission, 463 million roubles will be set aside for financing the operation and further development of the EAEU integrated information system designed to promote and inform consumers of the EAEU's activities, and over 290 millions roubles will finance the activities of the Court of the EAEU.^{[note 2][121]} Extra expenses of infrastructure and accommodation of commission workers are financed by Russia.^[35] In addition, Russia allocated US$1 billion to accelerate Kyrgyzstan's entry into the union.^[123][124] Another US$177 million was provided by Kazakhstan.^[125]

Languages

According to Article 110 of the Treaty on the Eurasian Economic Union (2014) the Russian language is the working language of the 'Bodies of the Union'.^[126]

Internal market overview

The Treaty on Increased Integration in the Economic and Humanitarian Fields signed in 1996 laid the first foundation for economic convergence. The treaty ensured the creation of a permanent executive organ to oversee integration of states that later would be part of the EAEU. It served as the blueprint for the future common market for goods, services, capital and labour.^{[journal 2][23]} The Single Economic Space established a single market across the territory of Belarus, Russia and Kazakhstan. In 2015 with the entry into force of the EAEU Agreement, the single market was expanded to include Armenia and Kyrgyzstan. The countries represent a market of some 180 million people and a combined GDP PPP of around $5 trillion.

Eurasian Economic Union has the tenth-largest economy in the world by nominal GDP and the fifth-largest by purchasing power parity. Since the turn of the century, member states have experienced economic growth with GDP averaging 6% to 8% growth between 2000 and 2007, rising again in 2010 after the Financial crisis of 2007–08. Since the establishment of the Eurasian Customs Union in 2010, trade between member states rose sharply. In 2011 mutual trade was $63 billion, 33.9% more than in 2010. In 2012, mutual trade was $68 billion and combined exports reached $594 billion, while imports were $341 billion.^{[journal 2]} The first integration stage primarily enhanced trade among member states, bolstered economies and created a legal and institutional foundation for the member states. The second stage includes the free movements of goods, people, services and capital.

The Eurasian Economic Union is designed to reach a number of macroeconomic objectives such as reducing commodity prices by reducing the cost of transportation of raw materials, increasing return on new technologies and products due to the increased market volume, and promoting "healthy" competition in the common market. It is also designed to lower food prices, increase employment in industries and increase production capacity. EAEU members like Belarus and Kazakhstan (by its Nurly Zhol economic policy) seek to leverage the EAEU as a bridge between the European Union and the New Silk Road economic belt.^[128]

The Eurasian Union is considered as a major player in the world's energy sector, raw materials, arms industry and agricultural production. In 2013 Russia was the 3rd most successful country in the world in attracting capital from abroad.^[129]

• 
  The Moscow International Business Center is a commercial district in Moscow that is currently under construction. The complex includes some of Europe's tallest skyscrapers
• 
  Saint Petersburg, the second-largest city and cultural capital of Russia
• 
  Yerevan, the capital and financial hub of Armenia
• 
  Almaty, the major commercial and cultural centre of Kazakhstan
• 
  Bishkek, the capital and financial hub of Kyrgyzstan
• 
  Minsk, the capital of Belarus

Customs Union and Four Economic Freedoms

The core objective of the Single Economic Space is the development of a single market and achieving the "four freedoms", namely the free movements of goods, capital, services and people within the single market. The four freedoms came into effect on 1 January 2015 (the day the Eurasian Economic Union was officially established). The free movement of people means that citizens can move freely among member states to live, work, study or retire.^{[citation needed]} Citizens of the member states of the union may travel to other member states on an internal passport. Although Russia also admits access to citizens of other CIS states without a passport, it is expected that after 2015 only citizens of the Customs Union will have this privilege.^[130] Member states have a common external tariff on all goods entering the market and unified methods of valuing imported goods since the creation of the Eurasian Customs Union on 1 January 2010. Objectives include joint coordination in the area of energy, industry, agriculture and transport.

Roughly 75% of Belarusian goods are exported, about half of which go to other member states.^[131] Trade within the union primarily consists of Belarusian machinery and agricultural products which are exported to Russia. Low gas prices from Russian energy producers are guaranteed to member states or countries wishing to join the union.^[132][133]

Coordinated, harmonized and single policy

Besides free movement of goods, services, capital and labour without a work permit ("four economic freedoms" as in the European Union), the EAEU pursues coordinated, harmonized and single policy in the sectors determined by the Treaty and international agreements within the Union.

Competition

The Eurasian Economic Commission operates a competition policy to ensure equal competitive conditions in the commodity markets of the Single Economic Space. It also aims at harmonisation and improvement of legislation of each of the three countries in regard to competition policy. The commission serves as the competition regulator for the single market and is also responsible for antitrust issues. Special regulations limit state intervention in the economy.^{[journal 2][134]}

Monetary union

Kazakhstani President Nursultan Nazarbayev had first proposed, in 2009, the creation of a common noncash currency called "yevraz" for the Eurasian Economic Community. It would have reportedly helped insulate the countries from the global economic crisis.^[136] In 2012, the idea of the new joint currency found support from Vladimir Putin and Dmitry Medvedev and by 2014 proposals were drafted in Eurasian Commission documents for the establishment of a Eurasian Central Bank and a common currency to be called the altyn which is to be introduced by 2025.^[137]

When discussing the Eurasian Economic Union, Vladimir Putin said the Eurasian Economic Union would include closer coordination of economic and monetary policy, including the use of a common currency in the future.^{[citation needed]} Although the creation of a monetary union was not envisaged in the Eurasian Economic Union Treaty, Russian Prime Minister Dmitry Medvedev called for the introduction of a common currency for the Eurasian Economic Union. Leonid Slutsky, head of the State Duma's CIS committee, backed Medvedev's proposal to start discussions on the creation of a monetary union. Slutsky said it could be introduced shortly after 2015, when the union's structure becomes clear.^[138][139] Belarusian president, Alexander Lukashenko, circulated the idea of creating a "new euro" for the Eurasian economic bloc. In April 2014, discussions to introduce a single currency resumed.

Russia's First Deputy Prime Minister, Igor Shuvalov, stated on 24 July 2014 that the Eurasian Economic Union will have a common currency unit in a span of five to ten years.^[9]

Energy

The Eurasian Economic Union is seen as an energy superpower, producing about 20.7% of the world's natural gas, and 14.6% of the world's oil and gas condensate in 2012, making it the world's top producer in both domains. It is worth mentioning that these figures are mainly due to Russian Membership of EAEU, with Kazakhstan contributing 1.9% and 0.6% in gas and oil production respectively. Considerably small oil and gas reserved were discovered in Belarus while there are no such resources in Armenia.^[140] It also produces 9% of the world's electrical energy and 5.9% of the world's coal, making it the third and fourth producer in the world, respectively. In Kazakhstan, energy is the leading economic sector. The country holds about 4 billion tons of proven recoverable oil reserves and 2,000 cubic kilometers (480 cu mi) of gas. Kazakhstan is the world's 17th largest oil exporter and the world's 23rd largest natural gas exporter.

Russia has the world's largest natural gas reserves,^[141] the 8th largest oil reserves,^[142] and the second largest coal reserves.^[143] Russia is also the world's leading natural gas exporter^[144] and the second largest natural gas producer,^[145] while also the largest oil exporter and the largest oil producer. While trade in oil and gas between resource-rich Russia and Kazakhstan is relatively low, the Belarus economy is heavily dependent on the access to the Russian hydrocarbons and – unlike the case with Kyrgyzstan and Armenia, Russia is Belarus's main trade partner accounting for 47% of all the trade. Belarus imports Russian crude oil (of which 45–50% were used for production of oil products to export) and natural gas (which were not directly re-exported) for the prices below the market ones, paying $173 for 1000 cubic meters of gas (for comparison – $250 for Armenia, $430 for Ukraine).^[140]

By 2019, Russia, Kazakhstan, Belarus and Armenia intend to create a common electricity market as well as a single hydrocarbons market by 2025. "With the creation of a single hydrocarbons market, we will have a deeper coordination that will allow us to be more competitive both in terms of pricing and in terms of getting high value added products in this very interesting and important market", stated Eurasian Commissioner Daniyal Akhmetov.^[146][147]

Infrastructure

The major economic centres are Moscow, Minsk and Astana.^{[citation needed]} The distance between Moscow and Minsk is 717 kilometers, and the distance between Moscow and Astana is 2700 kilometers, making infrastructure a key challenge for the integration of member states. Major infrastructure projects began during the 2000s in order to modernise and connect the regional bloc to other markets, facilitating both integration and trade in the region. In 2007 Moscow announced it will invest US$1 trillion by 2020 to modernise the country's infrastructure.^[148][149]

Kazakhstan ranks favorably in terms of kilometres of road per inhabitant as other developed countries in the world have much less roadway per inhabitant.^[150][151]

Railways have been the primary way of linking countries in the Eurasian Economic Union since the 19th century. It has always been the main way of transport in the Russian Empire and the Soviet Union up until today. The union ranks 2nd in the world in terms of railway trackage (about 7.8% of the world's share). However it is still looking to improve cross-border trade within the union.

The Eurasian Development Bank has pledged to help in the construction of facilities to produce new generation freight cars and freight containers in Tikhvin, Russia and in Osipovichi, Belarus to respond to the increasing demand for rail transport. Projects have also been launched in Kazakhstan, as the landlocked country is highly dependent on railways for trade.

The most renowned railway in the union is the Trans-Siberian Railway which links the Russian Far East to Moscow. The Southern route also travels via Kazakhstan.^[152][153]

The EAEU members cooperate with China's Digital Silk Road and have incorporated Chinese technologies into their digital infrastructure.^[154]: 187

Agriculture

The Eurasian Economic Union is the top producer of sugar beet and sunflower, producing 18.6% of the world's sugar beet and 22.7% of the world's sunflowers in 2012, as well as a top producer of rye, barley, buckwheat, oats and sunflower seed. It is also a large producer of potatoes, wheat and grain (and grain legumes).^{[journal 2]}

Part of the competences of the Eurasian Economic Commission are agriculture subsidies. It is responsible for the coordination of agricultural policy-making between member states and ensuring collective food security. The Eurasian Development Bank finances projects to further integration and develop agriculture. It has disbursed approximately US$470 million for projects between 2008 and 2013.

Projected economic impact

Member states remain optimistic of the union and key partners in the region, namely China, Iran, Turkey remain interested in it. A common belief is that the Eurasian Economic Union has significant potential over the next two decades, with experts predicting a 25 percent growth in the member states' GDP by 2030, which equates to over US$600 billion.^[158] The agreement will give member state citizens access to employment and education across the union. It will also entail collaborative policies in many sectors, including agriculture, energy, technology and transportation.^[8] These collaborative policies are particularly interesting for countries in Asia seeking access to energy, trade routes in Central Asia and Siberia, and agricultural goods.

Former president Dmitry Medvedev of Russia stated that both the positive and negative experiences of the European Union will be taken into account and argued that the Eurasian Union will avoid the problems of economic gaps and disparity between countries,^[113] such as those found in the eurozone, since the member countries have a comparable level of economic development, as well as common history and values.^[159]

The European Union and the United States as well as other western countries remain critical of the Eurasian Economic Union, with analysts stating that without modernisation and real economic reforms, the union will have little impact.^[8] The popular magazine The Economist stated that the advantages of joining the union remain unclear^[101] and further remarked "The agreement was vague, with technical details left unresolved, making it a political show rather than an economic one".^[160] Outlets have also stated that without Ukraine, the Eurasian Economic Union has lost a key member state necessary to the success of the union. Bloomberg's business magazine, Businessweek has affirmed that joining Putin's Eurasian Union looks like a bad deal, including for Russia. The union "won't really register on the radar of the global economy," said an analyst at the EU's Institute for Security Studies in Paris.^[161] Moreover, one research states that so far EAEU was not able to contribute to economic growth in Armenia – quite the contrary, it significantly slowed the economic performance of the country.

Pivot to Asia

The union is actively seeking to increase trade with East Asia. It commenced talks for official trade cooperation with ASEAN. Officials of both unions discussed opportunities for developing cooperation between them.^[162] The South Korean president launched a "Eurasian Initiative", which seeks to connect transportation, electrical, gas and oil links from Western Europe to East Asia.^[163] The initiative echoes China's long-standing "New Silk Road" project.^[164] The members of the union agreed to step up talks with Vietnam on creating a free trade zone, to strengthen cooperation with China, including in information exchange on goods and services, and to set up expert groups to develop preferential trade regimes with Israel and India.^[165]

Russia

The European Council on Foreign Relations and analysts suggest the Eurasian Union includes strategic interests as well as economic interests for its member states, especially Russia. In order to link both Europe and East Asia, Russia seeks to develop its eastern regions to increase its access to Asian markets. Russia's Far East has gained even more importance due to its proximity to alternative markets since the European Union and United States imposed sanctions on Russia following the crisis in Ukraine.^{[journal 5]}

China's rise as a major trading partner has been cited as a potential reason for Russia's loss of control over Central Asian economies. The union is seen as a way to counterbalance China's growing trade in Central Asia and the European Union's Eastern Partnership.^{[journal 6]}

As the trade bloc seeks to profit from the growing economies of East Asia, Russia has made steps to develop its eastern territories, Siberia and the Russian Far East.^{[journal 5]} However, the development of the Russian Far East may face difficulties due to Russia's traditional orientation towards Europe and the region's backward infrastructure and underdeveloped economy.^{[journal 7]} In 2012 Russian President Vladimir Putin called for Russia to "catch the Chinese wind in the sails of the Russian economy".^[166] During the same year, a Ministry for the Development of the Russian Far East was established and the country hosted a summit of the Asia-Pacific Economic Cooperation forum (APEC) in its eastern city of Vladivostok. The country also began striking deals and undertook massive efforts to improve infrastructure in its eastern territories.^{[journal 7]} Russia's pivot to Asia included the important task of creating a Eurasian trade bloc. The countries seek to increase their competitiveness by sustaining domestic development and defending their interests in the region.^{[journal 8]} An estimated 76% of Russia's exports depend on resources extracted (or manufactured) in Siberia. In order to transport goods from East Asia to Europe, they must be transported through Siberia by rail. Hence, the region plays an important role in trade. However, it remains less developed than Russia's western regions and modernisation plans are ongoing.

In 2013 the Russian government announced it would spend 450 billion roubles (US$14 billion) for the modernisation of the Trans-Siberian and Baikal-Amur railways. Russian President Vladimir Putin called the Trans-Siberian railway the country's "strategically vital transport artery". In July 2013 he stated "Rail freight traffic to our Far East ports has increased by 55 percent over the last 5 years and now comes to around 110 million tons a year". Projects to upgrade stations at the border with Mongolia, China and North Korea were also undertaken the same year.^{[journal 9]}

In 2016, Putin calls on Eurasian Economic Union, China, India, Pakistan, Iran and the CIS to join "Greater Eurasian Partnership".^[167]

Some experts also see the union as a way to curtail the loss of Russian influence in Central Asia.^{[journal 6]} Russian politicians have voiced their concerns over Russia's long southern borders and the challenges it may pose. By creating a regional trade bloc to keep its neighbours in Central Asia stable, Russia hopes to find securing its own borders easier.^[168]

Third-country EAEU Agreements

After 1 January 2015, the members of the EAEU do not have the right to independently conclude a free trade in goods agreements because they delegated their powers to the supranational level according to the Treaty on the Eurasian Economic Union (Article 35). ^[184]

According to the website of the Eurasian Economic Commission, the EAEU has signed bilateral (one of the parties is the "Eurasian Economic Union and its Member States") agreements with^[185]

• Vietnam^[186][187] (signed on 29 May 2015, entered into force on 5 October 2016^[188] and this Free Trade Agreement & Economic Integration Agreement covers trade in goods and trade in services^[189][190])
• Iran^[191] (the Interim Agreement was signed on 17 May 2018, and came into force on 27 October 2019^[192] and this Free Trade Agreement covers trade in goods.^[193]) Full FTA signed on 25 December 2023.^[194]
• China (signed on 17 May 2018, entered into force on 25 October 2019^[195] and this Agreement is not a free trade agreement at all since it does not provide any reduction in duties,^[182] but it creates a legal framework for trade and economic cooperation between the Union as a whole and China and on issues of customs cooperation, technical barriers to trade, sanitary and phytosanitary measures, trade protection measures, issues of electronic commerce, intellectual property, competition and public procurement, as well as sectoral cooperation and the Parties recognize the importance of economic integration in the Asia-Pacific and Eurasia and the importance of conjunction of the Eurasian Economic Union and the Belt and Road Initiative^{[196][197][198]})
• Serbia^[199] (signed on 25 October 2019, and entered into force on 10 July 2021^[200] and this Free Trade Agreement covers trade in goods^[201])
• Singapore (the EAEU-Singapore Framework Agreement and the EAEU-Singapore Free Trade Agreement were signed on 1 October 2019^[202])

Officially, agreements with Egypt, India,^[203][204] Indonesia, Israel,^[205] Mongolia and the UAE are under development.^[185]

Pre-2015 free trade in goods agreements

Although the countries of the Eurasian Economic Union have delegated their powers to conclude free trade in goods agreements to the supranational level according to the Treaty on the Eurasian Economic Union (Article 35),^[184] the previous agreements with third countries concluded before 1 January 2015 continue to be in force (Article 102).^[207] According to the Article 102: "Member States have the right to unilaterally grant preferences in trade with a third party on the basis of an international agreement concluded by 1 January 2015 of this Member State with such a third party or an international agreement to which all Member States are parties."^[207] Thus, agreements such as those within the Commonwealth of Independent States (the terms of the CIS FTA allow member states to enter into the FTA agreements with other countries, as well as to join/create custom unions.^[208]) and bilateral agreements that do not regulate relations with third countries remain in force for their parties.

The 1994 CIS FTA Agreement, 1999 CIS FTA Protocol (multilateral free trade is in force among 10 countries) and 2011 CIS FTA Treaty (multilateral free trade is in force among 9 countries) have signed by all members of the EAEU. The multilateral free trade regime under the 1999 Protocol is not applied by Russia at all. As of 2023, the Protocol has entered into force for Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Uzbekistan and Ukraine and 1 reservation was made by Azerbaijan on non-application in relation to Armenia and 2 specific opinions were expressed by Georgia and Ukraine.^[206]

2011 Commonwealth of Independent States Free Trade Area was negotiated before the establishment of the EEU on 1 January 2015. The CISFTA treaty came into force at different dates for every state. The treaty came into force in Armenia, Belarus, Kazakhstan and Russia at different dates between September and December 2012. Meanwhile, Kyrgyzstan applied the treaty starting 13 December 2013. In force since 2012, the 2011 multilateral CIS Free Trade Zone Treaty establishes a free trade area between Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia (now all EAEU member states), as well as Ukraine, Uzbekistan, Moldova and Tajikistan. Russia has suspended the Agreement with respect to Ukraine from 1 January 2016, following the provisional application of the DCFTA between the European Union and Ukraine.^[209] Ukraine did the same thing on 2 January with regard to Russia.

Thus, in addition to all previous multilateral agreements, the following agreements apply on a bilateral basis according to the article 102. Bilateral free trade agreements with Azerbaijan, Georgia, Turkmenistan, Serbia and Montenegro^[210] as well as "zero tariffs" agreements with Abkhazia^[211][212] and South Ossetia^[213] are in force in Russia. Bilateral free trade agreement with Turkmenistan is in force in Belarus.^[214] Bilateral free trade agreement with Turkmenistan is in force in Armenia.^[215] Bilateral free trade agreement with Serbia is in force in Kazakhstan.^[216]

Cooperation, Trade in Services and Investment Agreements

The members of the EAEU may conclude an agreement on investment and trade in services without the consent of EAEU supranational bodies, since these powers have not been transferred to a supranational level, however according to the Treaty on the Eurasian Economic Union (Article 35), an international treaty of the EAEU with a third party establishing a free trade regime may include other provisions related to foreign trade activities^[184] (i.e. Cooperation, Trade in Services and Investment). All Members of the Union retains autonomy (i.e., national competence) in matters of concluding agreements on free trade in services and investments. The process of concluding such agreements with third countries is carried out independently of the partners in the Union. The only condition prescribed in the Treaty on the EAEU is the obligation to provide to the Member States of the EAEU the same concessions, which are granted to the partner (partners) under that agreement (Article 38 of the Treaty and section 6 of Annex No. 16 to the Treaty).^[217]

The 2015 EAEU-Vietnam Free Trade Agreement & Economic Integration Agreement covers trade in goods and trade in services.^[189][190]

The Armenia–EU Comprehensive and Enhanced Partnership Agreement was signed by Armenia and all EU member states on 24 November 2017.^[218] The World Trade Organization classifies this agreement as an agreement on trade in services.^[219]

Russia has concluded 82 agreements on mutual protection of investments and investment promotion, including agreements with Cambodia, Iran, Morocco and the State of Palestine, which were signed after 1 January 2015. 65 agreements have entered into force.^[220]

On 8 June 2023, in Sochi, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan signed the Commonwealth of Independent States Agreement on Free Trade in Services, Establishment, Operations and Investment to partly integrate Uzbekistan and Tajikistan on the common standards of the WTO (General Agreement on Trade in Services) and the EAEU even without their membership in the WTO (Uzbekistan) or the EAEU (Uzbekistan and Tajikistan).^[221] Uzbekistan and Tajikistan have not decided to join the EAEU, but bringing country's legislation to the EAEU common standards can be considered as the first step.

The Ambassador of the United Arab Emirates in Moscow said that the UAE is striving for a free trade agreement by the end of 2023 with the EAEU to include provisions on trade in services and investment.^[222]

On 22 August 2024, Belarus and China signed an agreement on trade in services and investment. Belarus is the first EAEU country with which China has concluded such an agreement.^[223][224]

Unilateral preferences for economic assistance

The EAEU has the Common System of Tariff Preferences for approved goods from 29 developing and 48 least-developed countries.^[225] As of 5 March 2021, they are Algeria, Bolivia, Vanuatu, Venezuela, Ghana, Honduras, Egypt, Zimbabwe, Iran, Cabo Verde, Cameroon, Kenya, Republic of the Congo, Democratic People’s Republic of Korea, Côte d'Ivoire, Cuba, Morocco, the Marshall Islands, Federal States of Micronesia, Mongolia, Nigeria, Nicaragua, Pakistan, Papua New Guinea, Tunisia, the Philippines, Sri Lanka, El Salvador, Eswatini on the 1 list and Angola, Islamic Republic of Afghanistan, Bangladesh, Benin, Burkina Faso, Burundi, Bhutan, Haiti, Gambia, Guinea, Guinea-Bissau, Djibouti, Zambia, Yemen, Cambodia, Kiribati, Union of the Comoros, Democratic Republic of the Congo, Lao People’s Democratic Republic, Lesotho, Liberia, Mauritania, Madagascar, Malawi, Mali, Mozambique, Myanmar, Nepal, Republic of the Niger, Palestine(according to the United Nations General Assembly Resolution 43/177), Rwanda, Democratic Republic of Sao Tome and Principe, Senegal, Syrian Arab Republic, Solomon Islands, Federal Republic of Somalia, Sudan, Sierra Leone, Tanzania, Timor-Leste, Togolese Republic, Tuvalu, Uganda, Central African Republic, Chad, Eritrea, Ethiopia, South Sudan on the 2nd list.^[226]

The system of tariff preferences is aimed at promoting the economic growth of countries that objectively need economic assistance from the Union. In 2021, a decision was published to exclude 75 developing countries and 2 least developed countries from the lists, but at the same time, the status of the beneficiary country of the common system of tariff preferences of the EAEU is preserved for states in need of economic assistance from the EAEU.^[227] The first list of countries was approved in 2009 and did not change dramatically until 2021. As of May 2020, there were 153 countries in it, including Turkey, Brazil, Argentina, China and South Korea. The list was revised in 2021 so that there would be no injustice when lower-income countries provide tariff preferences to high-income countries. A country can obtain for tariff preferences if its income level is determined by the World Bank as "low-income" or "lower-middle-income", that is, the gross national income per capita in such a country is less than $4,045.^[228] The import duties applicable to products eligible for tariff preferences and originating from developing countries were at the level of 75% of the Most favoured nation duty rates and from least-developed countries at the level of 0%.^[229]

At the same time, the members of the Union themselves are recipients of tariff preferences. Kyrgyzstan was granted preferences from Canada, the United Kingdom, the EU, Japan, Norway, Switzerland, Turkey and the United States.^[230] Armenia was granted preferences from Canada, the EU, Japan, Norway, Switzerland and the United States.^[231] Belarus was granted preferences from Japan, Norway and Switzerland.^[232] Kazakhstan was granted preferences from Japan, Norway, Switzerland and the United States.^[233] In 2013, the World Bank announced that Russia had graduated to a high-income economy based on the results of 2012^{[234][235][236]} but in 2016 it was reclassified as an upper-middle income economy^[237][238] due to changes in the exchange rate of the Russian ruble, which is a floating currency. As a result of the World Bank's designation of a high-income economy, Barack Obama issued a proclamation: "I have determined that Russia is sufficiently advanced in economic development and improved in trade competitiveness that it is appropriate to terminate the designation of Russia as a beneficiary developing country effective October 3, 2014."^[239] U.S. Customs and Border Protection (CBP) indicated that Russia formally graduated from the GSP program on 4 October 2014.^[240] Thus, Russia does not have these preferences.^[241] In 2024, the World Bank again reclassified Russia as a high-income economy based on 2023 results.^[242]

Foreign affairs

The Eurasian Economic Union mainly uses its arms industry,^[253] raw materials,^[254][255] gas and oil reserves,^{[citation needed]} and railways^[256][257] as its key assets for trade with foreign countries.

Although Russia is the only member of the Eurasian Economic Union under sanctions from the West, other members of the Eurasian Economic Union have repeatedly used the bloc as a platform to articulate their opposition to sanctions and trade wars.^[258]: 16

Economic partners

The Eurasian Economic Union must negotiate as a whole to sign free trade agreements with other countries. Key players for the Eurasian Economic Union are the European Union, Turkey, Iran, China and the Korean peninsula. The EAEU has sought to increase its trade with partners in the Middle East and East Asia in order to profit from the growing trade between Europe and Asia.

Because of disagreements with the Eurasian Economic Union's largest member, Russia, the European Union does not officially recognize the Eurasian Economic Union.^[258]: 19 Tensions with the European Union in 2014 have led both unions to pressure post-Soviet states to join their integration unions. Both sides have accused each other of carving spheres of influence.^[259][260] Members of the union, especially Russia have tried to diversify their trade by signing economic agreements with China,^[261] Iran^[262] and Turkey.^[263] Trade with North and South Korea has also risen.^{[264][265][266]}

A rising China has been increasingly interested in Central Asia and the Eurasian Economic Union.^[267] Analysts see the union as a potential way China could facilitate its investments in the region.^[268] Historically, China held close economic ties with many countries throughout Eurasia. Under the Han Dynasty, its trade routes extended to the Roman Empire. The Economy of the Han Dynasty and other subsequent dynasties exchanged numerous goods with countries throughout Europe and Asia. Both China and the union have stated they would benefit from recreating trade routes modelled on the historic Silk Road.^[269]

Railways transport goods from China to the European Union through Kazakhstan and Russia. The country has pushed for the construction of more railway lines to connect Berlin to east China to reduce shipping time. It proposed major high-speed railway lines going towards Europe via Russia and Kazakhstan and another through the Middle East via Tajikistan, a potential future member for the union.^[270][271] China has signed numerous energy deals with Russia and Kazakhstan, as it tries to move from coal to less pollutant alternatives.^[272][273]

Iran has sought to diversify its economy as well, seeing the EAEU and China as key economic partners. Relations between Russia and Iran have increased as both countries are under U.S. sanctions and are seeking new trade partners. in 2014 the two countries signed a historic US$20 billion energy deal.^[274][275] A free trade agreement between Iran and the Eurasian Economic Union came into force on 27 October 2019.^[276]

Kazakhstan seeks to enhance its ties with Turkey, a key player in the region. In July 2014, Turkey announced closer economic ties with the EAEU, including a possible free trade agreement in the near future.^[277]

Armenia and Nagorno-Karabakh

In September 2013, Armenia announced its intentions of joining the Customs Union of Belarus, Kazakhstan and Russia. At the time of joining the Union, the Republic of Armenia already had preferential treatment within the framework of the CIS as a party to the Free Trade Zone Agreement of 18 October 2011, and therefore enjoyed significant tariff benefits. According to an IMF representative in Armenia, Armenia's membership to the Eurasian Economic Union resulted in about $250 million a year in customs revenue. Armenia also benefited in the form of secured privileges for 752 products until 2020, which implies no EAEU tariffs due to Union membership.^[278] Joining the Union allowed the country to get even more tangible economic effects due to the functioning of the Common Economic Space, the use of common technical regulation, sanitary and phytosanitary measures, non-tariff regulation. Such results confirm that for the implementation of full-scale freedom of movement of goods, liberalization of tariff regulation alone is not enough.^[279] The region of Nagorno-Karabakh, however, is disputed between Armenia and Azerbaijan. Tensions rose further in the Caucasus region on 30 July 2014 due to clashes between Armenian and Azerbaijani soldiers.^[280]

Experts estimate that with the accession of Armenia, the internationally unrecognised Nagorno-Karabakh Republic would not be integrated into the Eurasian Union.^[279] Armenia is a permanent political, military and economic ally of Russia, whereas Azerbaijan holds close ties with Armenia's long-standing enemy Turkey. The Kazakh President Nursultan Nazarbayev expressed concern in 2013 that no reliable customs border between Armenia and Nagorno-Karabakh could be drawn. However, Nazarbayev expressed that he holds all the existing disagreements preventing Armenia's integration into Eurasian Economic Union are surmountable.^[281] The Chairman of the Foreign Policy Committee in the Armenian Parliament, Artak Zakarian, announced on 14 May 2014 that Armenia will not build any customs borders, including with the region of Nagorno-Karabakh.^[282]

According to Eurasian Economic Commission statistics, Eurasian Economic Union countries experienced a 1.9% GDP increase between January–June 2018, compared to the same period in 2017. Armenia had the greatest GDP growth index throughout the reporting period – 8.3%. The EEU's industrial output increased by 3.3%, with reprocessing industry increasing by 62.7% and mining increasing by 27.9%. Again, Armenia had the largest growth in industrial production – 9.6% – despite a 12.7% fall in mining.^[283]

Uzbekistan, Tajikistan and Kyrgyzstan

Previously, Tajikistan was on track to become a potential member of the union, having signed the treaty on the Eurasian Customs Union and the Single Economic Space. However, due to border disputes between Kyrgyzstan and Tajikistan, the integration process in Tajikistan has stalled.^{[78][79][284]} Both countries exchanged fire in December 2013 and August 2014, which resulted in casualties.^{[284][285][286]} Both countries have since announced they would resolve conflicts and improve border cooperation. Officials hope to make significant progress by the end of 2015.^[287][288] In March 2020, Uzbekistan announced that it wished to become a Eurasian Union observer state.^[95]

International response

Former President of the European Commission José Manuel Barroso stated at the World Economic Forum that the EU supports the regional integration, including the Eurasian Union. He also praised Kazakhstan for joining the bloc. He criticized the post-Soviet space, saying "the integration in the region is not sufficient". However, he warned that the Russo-Ukrainian War is a major obstacle to good cooperation between the EU and the Eurasian Union.^[289][290]

Tensions between the EAEU and the European Union (EU) occurred as both have sought to deepen their ties with several former Soviet republics. The EU has signed free trade agreements with Ukraine, Moldova and Georgia. However, separatists in all three countries back closer ties with Russia. Ukraine planned to sign an EU association agreement in 2013, but abruptly cancelled the signing under Russian pressure to join the EAEU. This led to mass protests against Ukraine's president,^[291] with the EU supporting a failed political settlement before president Yanukovych fled to Russia,^[292] and Russia then annexing the Crimean peninsula (following a disputed referendum) and supporting separatists in Eastern Ukraine.^[293][294] In response, some member states of the European Union have sought to find alternatives to Russian gas, while others have voiced their support for the construction of the South Stream pipeline which circumvents Ukraine. Later the already started construction of the pipeline, under US sanctions on Russia and pressure on EU, the project was abandoned. Analysts believe Russia backs the Eurasian Economic Union in order to limit western influence in the region.^[295]

Western analysts generally see the Eurasian Economic Union as a way to reunite many of the former Soviet republics. For example, Washington Post author Abigail Hauslohner wrote the treaty was intended "to further bolster [Russia]'s ties to former Soviet republics."^[8] The United States expressed its opposition to the Eurasian Union, claiming it is "an attempt" to re-establish a USSR-type union among the former Soviet republics.^[296] In December 2012, former Secretary of State Hillary Clinton claimed "It's not going to be called that [Soviet Union]. It's going to be called customs union, it will be called the Eurasian Union and all of that, but let's make no mistake about it. We know what the goal is and we are trying to figure out effective ways to slow down or prevent it".^[296]

Kazakhstan's president Nursultan Nazarbayev called it "a hard-won achievement" and "a blessing for our people."^[8] Public support in Kazakhstan for the country's accession to the EAEU stood at 68% in June 2014, with 5.5% opposed.^[297]

Thailand, Iran, New Zealand, Tunisia,^[298] Turkey, and Vietnam are among the countries that expressed a desire to conclude trade agreements with the new Eurasian Economic Union after the treaty was signed.^[299] In 2018, the Faroe Islands signed a new memorandum of understanding with the EEU. The MoU is designed to boost trade and cooperation between the two sides.^[300]

Existing integration projects

The Eurasian Customs Union has already brought partial economic integration between the three states, and the Eurasian Economic Union is said to be a continuation of this customs union.^[26] However, the impact or legacy of that agreement is unclear^[301] – trade between the three states actually fell 13% during the agreement's first year.^[101]

A number of other regional organisations also provide the basis for further integration: the Union State of Russia and Belarus; the Collective Security Treaty Organisation, consisting of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan; and the Commonwealth of Independent States comprising most of the post-Soviet countries.^{[journal 11][302][303]}