Prospects for economic cooperation between the Eurasian and European Unions

We believe, it is appropriate to start discussing this topic, crucial for the future of the whole Europe, with the review of the history of European integration, since it is responsible for some skeletons in the closet that now impede the formation of a greater Europe. It is well known that “the idea of unification of the European continent has accompanied every stage of its history” [1]. However, all the previous attempts to implement this idea into practice (initiated by the Roman Empire, the medieval Charlemagne’s empire, French Emperor Napoleon and the leader of the Nazi Reich Adolf Hitler) were the manifestation of strong-arm policy, and they largely discredited this idea in the world public consciousness.

Suffice it to say that the First and Second world wars, which brought countless victims, troubles and sufferings, began on the European continent. And it is Europe that had to deal with the most negative consequences of these world wars: “After World War II Western Europe, which used to be the incarnation and stronghold of European civilization, lost world leadership; after World War II it faced the threat of becoming a region without its own future, completely dependent on other world forces” [2].

The sad historical experience of the attempts to unite all the European countries with the use of power justifies the following conclusion: “Attempts of unification by force have demonstrated their transient nature. The overall outcome was the undermining of Europe’s standing in the world. One more resort to force would bring it to self-destruction” [3]. The validity of this conclusion, can be proved by the fact that the share of Europeans in the world population in the 20th century has decreased from 25% to 12% [4].

Furthermore, when working out the promising directions of development of relations between the European countries (integration groupings), the integration experience accumulated by the Europeans requires the priority consideration of the actual and potential challenges and threats that are brought by new attempts of practical implementation of the idea of unification of the European continent. For instance, Belarusian political scientist S.A. Kizima, discussing the idea “integration of integrations” (i.e. a possible combination of integration plans implemented in the framework of Eurasian integration, on the one hand, and within the framework of EU integration on the other) put forward by the President of the Republic of Belarus A.G. Lukashenko [5], identifies the following eight challenges that Eurasian integration throws out to the European Union:

• 1.    Aggravation of regional competition between the Eurasian economic Union

• 2.    Aggravation of regional competition between these integration associations for the countries that are currently the EU members or candidates for EU accession.

• 3.    Competition between the EEU and the EU for natural resources of the former Soviet republics.

• 4.    Geopolitical competition between them for the spheres of influence in the modern world.

• 5.    Technological competition between the two major European integration associations.

• 6.    The revival of the industry in the framework of the EEU poses environmental risks for the EU.

• 7.    Competition between the EEU and the European Union for highly qualified personnel.

• 8.    Reindustrialization and neo-indu-strialization of the countries included in the EEU, can deliver a blow to the EU industry, similar to that which was caused by a rapid industrialization of China [6].

(hereinafter: EEU) and the European Union (hereinafter: EU/European Union) over the former Soviet republics.

Other researchers name other challenges that the European Union will have to face due to further development of Eurasian integration. For example, the Russian strategic analyst A.A. Kurtov points out the following challenges:

• 1.    Authoritarianism, which is characteristic of many former Soviet republics, is unlikely to be accepted by the public opinion in the EU member states: “Authoritarianism in its varieties is the primary type of political regime in the former Soviet Union” [7].

• 2.    Leaders of former Soviet republics lack the desire to delegate their powers to any supranational bodies, unlike, say, leaders of EU countries: “Authoritarianism, not to mention the cases where it acquires some elements of ethnocracy with its priority rights of the “indigenous” nation, or even more archaic – despotic forms of power organization (like

• 3.    Absence of a strong legislative power in the framework of the EEU, in contrast to the European Union: “The EU has the European Parliament, directly elected by the citizens of the EU member states. The Eurasian Economic Union has no such body so far; and if it were to be established, it would be most likely modeled on the CIS, CSTO and EurAsEC, the organizations that possess weak interparliamentary bodies consisting of deputies from national legislatures” [9].

• 4.    Former Soviet republics are characterized by a dominant priority of local interests over the interests of integration associations (CIS, CSTO, EurAsEC and others): “If we make a cold-eyed assessment of the situation, we cannot but admit that the creed of those, who was occupied by the integration in the Commonwealth after the collapse of the USSR, in most cases, can be expressed by the following motto: “to get the maximum benefits for themselves at the minimum obligations to others” [10].

• 5.    No matter how the idea of “integration of integrations” is implemented in practice, the Russian Federation with its vast territory and abundance of natural and human resources, etc., is a giant, with which no European country can compete in the struggle for leadership in a greater Europe; this fact will inevitably cause all sorts of fears on their part: “Russia has remained a mighty power in comparison with other participants of the integration process, and this fact gave rise to various phobias on the part of European states” [11].

in Turkmenistan), as a rule, never seeks to delegate part of their real powers to anyone. Authoritarian governments cherish their sovereign rights to manage the policy, to dispose of raw material and human resources on their territory. If they have to compromise, without which no integration process is essentially possible, such compromises are usually either false, or short-lived” [8].

We can name other challenges and threats that the EU countries would face in case of their integration with the former Soviet republics in the framework of a greater Europe [12]. However, we think the consideration of the above-mentioned challenges provides ample proof to the fact that it is impossible to establish a united, greater Europe in the coming decades. In any case, the French scientist, Professor of Sorbonne M. Lefebvre came to a similar conclusion: “The chance to put the idea of a political Europe into practice is no greater now than it was earlier” [13].

Moreover, we have no doubt that the competition between the EEU and the European Union will remain tough. In this case, we have to agree with the opinion of S.A. Kisima, who points out that “the EU is not pleased with Eurasian integration. The establishment of the Eurasian Union will be accompanied by a constant opposition on the part of the jealous European Union” [14]. However, all the above does not mean that the Europeans have to abandon all hope of creating a greater Europe, which “would help the Europeans to become a single and strong historical community” [15] that still plays the leading role in the modern world. We are talking only about the abandonment of illusions and intentions to “build castles in the sand”. Especially since the former Soviet Union “has already had a negative experience with integration projects, first of all, because of the impossibility of the tasks and the attempts to solve them quickly” [16].

For the above reasons, the development of promising areas of cooperation between the EEU and the European Union should proceed from the existing political, economic, social, scientific and other realities of the modern world; and it is necessary to carry out pragmatic integration policy aimed at solving not just any tasks but scientifically grounded tasks. Moreover, the basis for such policies should consist of the norms of international law and fully complying interests of the two European integration associations, i.e. the international realities and requirements that were not taken into account until now: “Our own historical experience shows that so far integration within our space was never carried out on the basis of international law under compliance with democratic norms and taking into consideration the political equality of the parties. To be successful, integration should be attractive to all of its participants” [17].

If we look from this viewpoint on the possible ways and directions to implement the idea of “integration of integrations”, we cannot but notice the obvious fact that the EEU and the EU differ in what they consider to be the most promising direction of interaction between each other. In particular, the EEU believes that the priority and the most promising direction of cooperation with the EU is the creation of a Common European Economic Space (CEES), i.e. economic cooperation between the former Soviet republics and the EU nations without restrictions (quotas) and high tariff duties [18]. For example, the experts, who prepared the Eighth National Human Development Report “Belarus: Addressing Imbalances in the Economy and Society (2004–2005)”, believe that “in the long term, integration within the EU – Belarus – Russia triangle should result in the creation of a common economic area that applies progressive EU standards and facilitates the movement of Belarus and Russia towards a post-industrial economy” [19]. Similarly, in the early version of the “Big Eurasia” strategy, developed by the Department for Economic Cooperation with CIS Countries (Ministry of Economic Development of the Russian Federation), the Common Economic Space (CES) is planned to be build not within the CIS itself, but between the CIS and the EU on the basis of the Treaty on the EU–CIS Free Trade Area. Next, according to the updated version of the Strategy-2020, prepared by the working group of experts for the Russian

Federation Government, in the long term (after 2015–2020) the economic space of the Eurasian Economic Union should “fit” into the common economic space of Europe in the West (EEU–EU) and in the APEC space in the East (EEU–SCO–APEC), creating a wide Eurasian space of economic cooperation, or “harmonious community of economies from Lisbon to Vladivostok”, as V.V. Putin called it [20].

Unfortunately, the priorities of the EU in its integration policy concerning the EEU countries are very different. According to the Belarusian political scientist L. F. Evmenov, who studied the European Union’s basic documents, “in all the legal acts the EU attaches paramount importance to the issue of political convergence and unity and considers it a priority . For instance, the Joint Declaration of the Eastern Partnership, which invited six former Soviet republics (as “students”, naturally) that lag considerably behind political, human rights and legal standards of the developed countries of the European Union, states: “The main goal of the Eastern Partnership is to create the necessary conditions to accelerate political association and further economic integration between the European Union and interested partner countries” (see: Declaration Commune adoptee lors du sommes de partneriat oriental. Prague, 2009. P. 6). With this aim, the Eastern Partnership will seek to support “ political and socio-economic reforms of the partner countries , facilitating approximation towards the European Union” (ibidem) [21].

In other words, the EU leadership is trying to use its largest economic potential, constituting 29% of the global GDP (for comparison: in the USA – 23%, in China – 10%, in Japan – 9%, in Russia – 3% [22]) and its big internal market, very attractive for export-oriented enterprises of the former Soviet states, in order to impose its political and other standards on the EEU countries. In this regard, the Russian political scientist M.G.

Delyagin notes that “developed countries (including in the framework of the Eastern Partnership) act (perhaps unknowingly) by the principle “Take our standards and we will take your resources and destroy what you can use to compete with us”. In general, it increasingly resembles not a just, but a neo-colonial model of cooperation” [23].

The European Union was guided by the same hegemonic objectives when it attempted to establish the Transatlantic Trade and Investment Partnership between the United States of America and the European Union (TTIP). This strategic initiative of the EU is viewed negatively even by Western researchers. For example, the Swiss Economist, Professor J.-P. Lehmann believes that the TTIP belongs to the category of centrifugal forces that disintegrate the common European space: “This is an attempt of the “old” powers to prevent the rise of “newcomers” by creating a block to preserve the levers of the global power and the ability to set the rules” [24]. According to J.-P.Lehmann, the counterbalance to this dubious strategic initiative of the European Union is “a real large-scale initiative on the part of Russia would be the suggestion of an idea, and then – of a detailed plan for creating an open Eurasian economic space, which would extend from Korea in East Asia to Ireland in Western Europe and include South, Central and West Asia. This should be an open space rather than a preferential, discriminatory area, as in the case of the TTIP and TPP [Trans-Pacific Partnership promoted by Washington. S.D., V.Shch .] ... By adopting an imperative of stable, genuinely multilateral principles, this initiative will take under control the ongoing transformations and coordinate development” [25].

Unfortunately, even among Russian economists there are those claim that economic integration should be carried out exclusively within the national economic systems; at that, the functions of integration associations are reduced to the solution of political tasks, like the European Union plans to do in its interaction with the EEU. In particular, the Russian researcher R.M. Doshaev believes that “in the near future, Russia and other CIS countries will have to determine the functions and tasks of the CIS under new conditions. It would be necessary and proper, if this association were used for solving only political tasks rather than economic ones, associated with the development of national economies, including integration. And besides, once and for all to name the CIS not an integration union, but simply a political body that handles issues of peaceful coexistence of former Soviet republics” [26].

Although the primacy of economic integration of the CIS countries before any other type of their integration interaction was already recognized by many national researchers in the first years of existence of this integration association: “Military alliances hold together due to a common external threat. Unlike military alliances, economic integration is determined by internal needs of the states at a certain stage of their development. By increasing competition, it improves the life support systems of society and raises its welfare. Apparently, therefore, the economic integration is primary; it has a priority over all other aspects of the integration process: political, military, social and legal. The emergence of the single economic complex overtime evokes the need for the emergence of political, military, legal and other superstructures. Attempts to put the pyramid upside down, to modify the natural course of integration usually failed” [27].

Currently, many Belarusian researchers take a similar position on the issue of primacy of economic integration among all the existing types and forms of integration processes: “It is only a mutually beneficial economic cooperation that can be the main driving force of integration processes in the Commonwealth.

Political and military alliances of different countries were repeatedly created and dissolved throughout the history, and only by rare exceptions led to economic integration. Integration implies first of all, the economic cooperation between the states. The need for economic integration of real economic entities, regardless of forms of ownership, is the main condition of its onward movement. Political decisions should contribute to the creation of the necessary economic preconditions” [28].

By the way, the history of the European Union itself shows telling examples of how the struggle between different types of integration (military-political and economic) always ended up with the victory of economic integration: “In 1954, the French Parliament rejected the Treaty on the European Defence Community signed by all the six countries, thereby crossing the plans of the forced military-political integration. It took them three years to agree that a “United Europe” would be created through economic integration, and to sign the Treaty of Rome establishing the European Economic Community” [29]. So far, one of the basic conflicts impeding the transition of the European Union to a political union (a new stage of integration) lies in the disagreement of its member states on the issues of foreign and defense policy, and on a closely related issue concerning the further transfer of functions from the national to the supranational level. The recent global political and military conflicts have clearly shown that the EU is not able to solve them “unanimously” and that its political weight on the world stage is considerably weaker that its economic potential” [30].

According to the Russian researcher D.A. Gavrikov, the main obstacles standing on the way of formation of a common external and defense policy of the European Union, include the following:

• 1)    the largest EU countries (UK, Germany, France) “are not ready to lose their influence on the world stage in favor of a unified “European Union” voice” [31];

• 2)    individual EU countries have multivector geopolitical interests in different regions of the world (France – in Africa, Spain – in Latin America, Germany – in Eastern Europe and so on);

• 3)    not all the EU states are ready to transfer part of their sovereignty to the government in Brussels: “Many countries, especially the UK and Scandinavian states often perceive it as a loss of national sovereignty” [32];

• 4)    EU countries have different degree of readiness for self-defense and a different set of commitments to major international military organizations (NATO, OSCE and WEU) [33].

The attractiveness of the EU for the former Soviet republics is reduced by certain political standards and requirements imposed on the candidates for EU accession, and also by the introduction of restrictions in the field of labor migration planned by the leading EU countries: “Recently the UK Prime Minister D. Cameron...announced the necessary measures that restrict labor migration from Eastern European countries that are EU members. Mutual openness of labor markets and the freedom of movement is the cornerstone of a coordinated policy and, as it is rightly believed, “the key point of external attractiveness of the European Union”. The “reform” suggested by the UK draws a clear discriminatory line separating Europe on the principle: “a rich man is no friend to a poor man”... But this approach to labor migrants from Eastern Europe was supported by Austria, Germany and the Netherlands” [34]. Recently, Switzerland has joined this group of countries.

Unlike the EU, China, when dealing with former Soviet countries, “deliberately emphasizes that it is interested only in business, and it does not set forth any political conditions” [35]. Moreover, China confirms its declared position by signing mutually beneficial agreements with Belarus, Russia and Ukraine for granting them quite a significant volume of loans for implementing the largest infrastructure projects in these countries.

The European Union holds quite a different position concerning the allocation of big loans to former Soviet republics for transition to European standards; there are some objective reasons for this: “Neither Brussels nor Berlin will achieve any consensus within a United Europe. What remains? One cannot promise substantial loans, which are not available. One is unable to reach an agreement with the IMF, which does not agree to provide Ukraine with special refinancing terms, except for small concessions. One cannot promise a share in the product market, overheated by internal competition. Finally, it is impossible to make room in the European labor market overwhelmed with raging passions. One cannot even guarantee the freedom of movement, if the latest UK proposals will be accepted. Political pressure is the only remaining alternative” [36].

Historical experience proves that the efficiency of using this method as a political pressure, in the case of the East Slavic countries (Belarus, Russia and Ukraine) is extremely low in handling integration cooperation issues. The European Union becomes increasingly aware of the futility of this method in respect of the above countries. The Russian political scientist N.K. Arbatov states that “today the EU and Russia show an obvious desire to build relations with each other on the model of EU’s relations with China. It is proposed to focus on common interests rather than common values” [37].

In this context, the suggestion of the VicePresident of the NAS of Ukraine, Academician V.M. Geets seems very promising: he proposes to join the efforts of the CIS countries and the European Union for establishing a number of single integration spaces: “Further EU enlargement to the East under the same ideology of the formation of the Union through the admission of new members, such as Turkey and/or Ukraine, will lead in many respects (domestic and foreign policy, economy, society and culture) to the aggravation and emergence of new destabilization factors in the EU and in the globalizing world. That is why the movement to the East should seek the aim of allocating separate spaces (sectors) rather than the aim of obtaining membership; the coordinated actions in the framework of these sectors would be in some way similar to the conditions of formation of the ECSC [European Coal and Steel Community. S.D., V.Shch.]. Then, cross-border mergers and acquisitions will become dominant; although they will be lobbied by the government in the interests of their countries, but they will promote the creation of a single market by overcoming economic differences” [38].

The top Russian officials and Russian scientists, who devote their research to European issues, have similar opinion in this matter. In particular, as follows from the official statements of the Russian Government, Russia continues to seek close cooperation with Europe, but without entering the EU structures [39]. In turn, Research Associate at IMEMO V. Gutnik believes that Russia’s accession to the European Union “is inexpedient primarily because its organizational structures and management mechanisms do not comply with the tasks that Russia’s economy faces...Russia must remain independent in making decisions. If we retain the freedom of choice of forms, tools, changes, timing, etc. and at the same time will take Europe as a model, our country will become more European than in the case if Moscow achieves formal membership in a common organization of European States and will be forced to obey the “jointly developed solutions” [40].

The growing trade turnover between individual countries of the EEU and the European Union shows that the common European economic space (with participation of representatives from both European integration associations) is already being created, regardless of whether officials in Brussels like it or not.

For example, modern economic cooperation between Belarus and EU countries is characterized by the following indicators:

• 1.    “Today the EU is the second largest trade partner of Belarus after Russia. In ten years – from 2001 to 2011, the goods turnover between Belarus and EU countries has increased tenfold, reaching 24.4 billion US dollars in 2011, or 28.4% of the total foreign trade turnover (which amounts to 86.04 billion US dollars)” [41].

• 2.    “The main trade and economic partners of Belarus in January – October 2013 among the European countries were Germany (3rd place in the trade turnover among all the countries - trade partners of Belarus), the Netherlands (4th), Poland (6t), Italy (7th), Lithuania (8th), UK (9th), Latvia (11th place). Thus, our first ten trading partners consists of the European Union countries by more than the half [42].

• 3.    Economic cooperation of Belarus with the EU countries is not limited to trade only: “For 9 months of 2013 the EU allocated investments to Belarus in the sum of 4.9 billion US dollars (100.8% compared to the same period in 2012), including direct investments – 3.7 billion US dollars (106%). The share of investors from the European Union accounts for 45.2% of all foreign investments into the Belarus economy in January – September 2013” [43].

Economic cooperation between Russia and EU countries is even more impressive:

• •    “Back in 2003, Russia and the EU agreed on the formation of a common economic space, coordination of the rules of economic activity without creating supranational structures” [44].

• •    “For Russia the EU is now (and is likely to remain in the future) partner number one in the economic sphere” [45].

• •    “Import and export operations with the EU are the priority for Russia; and they account for about 45% of all Russian foreign

trade turnover. For the EU, Russia occupies only the 3rd place according to these indicators (after the USA and China) with a share of 9.5%” [46].

• •    “About 40% of Russia’s gold and foreign currency reserves is in Euro. The foreign trade pattern between Russia and the EU objectively allows them to smooth deficits and imbalances of their economies. The consolidation of economic opportunities of Russia and Europe can create the potential for development of the huge industrial and raw materials giant “from Lisbon to Vladivostok” [47].

Finally, the above-mentioned indicators and prospects for economic cooperation of individual countries of EEU and the European Union, if we sum them up, look even more impressive:

• 1.    “In 2011 the EU accounted for 55.5% of the total exports of Russia, Belarus and Kazakhstan and 44% of their total imports. In turn, the Customs Union is the third largest trading partner for the EU (11% of foreign trade turnover), after the USA (13.8%) and China (13.3%). By the volume of sales of goods in the EU market, the Customs Union, which accounts for 13.8% of total imports of the EU countries, occupies the second place after China (17.3%), outrunning the United States (10.9%). The share of the Customs Union in the EU export accounted for 7.9% – it is the third place after the United States (17%) and China (8.9%)” [48].

• 2.    Speaking about the prospects of development of economic cooperation of the Eurasian Union and the European Union, we should point out that these largest integration associations of our continent are to a great extent complementary parts of one Greater Europe and if they consolidate their economic potentials, they can leave their geo-economic rivals (China, the US and Japan) far behind. RAS Corresponding Member R.S. Grinberg noted on this occasion that “it is only giants that can fight giants” [49].

• 3.    It is the central position of the EEU on the Eurasian continent (between the EU and the ASEAN and SCO), that determines the geo-strategic role that the EEU can perform as a natural transport and energy bridge between Western Europe and East Asia on the whole space of the world’s largest continent, which has a population of 4.8 billion people and more than half of world GDP (about 40 trillion US dollars) [50].

• 4.    Due to a closer economic cooperation between the EEU and the European Union, the latter can overcome its one-sided focus on the use of a neoliberal economic model, and associated social costs: “All stages of European integration were accompanied by numerous debates about its ways and purposes, the related processes and phenomena were discussed and criticized. However, the form, in which the European project has been implemented since the late 1990s, evokes the growing resistance of citizens, not only in the “problem” countries. In the course of consolidation, quite a hard neo-liberal economic model was implemented with such integral elements as the reduction in wages and social spending, the weakening of social security institutions, elimination of sustainable employment, etc. The originally difficult situation was aggravated by the global financial and economic crisis of 2008–2009” [51]. As a result, due to the use of the neoliberal economic model, EU’s GDP decreased by 4.5% only in 2008–2009 and the number of dollar billionaires in the world has increased manifold over the same period [52], also due to profiteering with EU finances. We do not observe such an obvious dominance of the neoliberal economic model in the EEU economies, and the strategic goal of these countries is declared to be the creation of a socially oriented market economy. The latter will have to be considered by the EU nations in their economic cooperation with the EEU countries.

• 5.    Due to closer economic cooperation between the EEU and the largest EU countries

(Germany, Britain, France and others), Russia’s excessive domination in the EEU economy can be partly smoothed: “The Russian Federation has 87.6% of the economic potential, 78.4% of the population and 83.9% of the territory of the emerging EEU. Russia accounts for 78.3% of total GDP, 53.2% of the population and 79.3% of the territory in the free trade zone within the CIS. This creates both advantages and difficulties in the formation of Eurasian economic integration structures [53]. Russian researchers recognize the existence of a “dimensions barrier” within the post-Soviet integration: “It is easier for EU members than for CIS members to find compromises in an interesting game called “to give and take”. Russia is too large to be an equal partner, and this impedes any integration with its participation” [54]. For the above reasons, closer economic cooperation of the EEU countries with the largest EU countries will make it possible to balance Russia’s economic influence in the framework of the Common European Economic Space.

Thus, mutual benefits achieved by the countries of the Eurasian Union and the European Union due to economic cooperation between the two largest integration associations of Europe, are more than obvious. As R.S. Grinberg pointed out in this respect: “Our conditions for integration are worse than those in the European Union. But as for a purely economic aspect of integration projects, they are favorable under certain conditions [55]. And the main condition is that the leadership of both integration unions completely abandon the use of any ideological motives in the development of joint integration megaprojects. Since the world integration practice shows that relying on a particular ideology inevitably leads to the “formation of a system of two global polar elements of the world – dominant and subordinate, the former is organized and socially united, the latter is disorganized and divided. Attempts to implement this model by mechanical planting of multiculturalism, by defining national objectives based on the interests of international capital, and by promoting a “new nomadism”, in reality always lead to the loss of social solidarity and growth of internal conflicts” [56].

Our analysis of the existing realities of the Eurasian and the EU integration allows us to make a conclusion about exceptional prospects of economic cooperation between the EEU and the European Union. This conclusion is supported by the very history of world integration, the main axiom of which is the statement that economic integration always comes before political integration [57]. Thus it is necessary to emphasize the importance of economic cooperation between the two integration blocs (EEU and the European Union), which is the practical implementation of “integration of integrations” idea. In other words, along with bilateral economic cooperation between the Eurasian Union and the European Union, it is necessary to promote multilateral economic cooperation in the framework of the two basic types of European integration (Eurasian and the EU). The President of the Republic of Belarus A.G. Lukashenko points out: “This integration on the post-Soviet space will lead to closer and more equal relations with the European Union and the creation of a Greater Europe faster than separate visits to European offices” [58].