Cracks in the fledging Eurasian Economic Union were on clear display in Astana on March 20 as the leaders of Russia, Kazakhstan and Belarus met to discuss the regional economic slump.
Nursultan Nazarbayev, the host president, made a point of affirming Kazakhstan’s support for Ukraine’s territorial integrity – a statement guaranteed to raise the Kremlin’s hackles. Vladimir Putin responded with a call for an EEU currency union, something that is anathema to both Nazarbayev and Alexander Lukashenko of Belarus.
“It is necessary to emerge from the situation that has arisen in Ukraine via diplomatic means; no military solution to this problem exists,” Nazarbayev said of Ukraine. “In so doing, it is important that any decisions taken are based on fundamental principles of international law. We are interested in Ukraine remaining a stable, independent, and territorially intact state.”
With Russia denying it has fomented separatist strife in southeastern Ukraine, such a pointed public statement from a close partner was guaranteed to rouse Putin’s ire. In his remarks, Putin said a ceasefire deal reached in Minsk in February – which has been routinely flouted – created a “real opportunity for a gradual de-escalation of the armed conflict.”
Putin said it was time to put on the agenda the establishment of a single currency for the EEU – something Astana has angrily ruled out and Lukashenko has pledged will not happen under his watch. Putin’s suggestion is all the more provocative, given the Russian ruble’s precipitous decline over the last year, which has hurt its EEU partners.
Putin said the three leaders had agreed to “continue coordination of monetary policy.” “We think the time has come to talk about the possibility of forming a currency union in the future,” he added. The responses of Nazarbayev and Lukashenko were not made public.
The trio made it clear that they were gathering – without the EEU’s fourth member, Armenia (whose president is in Brussels) – to discuss anti-crisis measures to combat the regional economic downturn.
“We have not concealed today the problems that exist, and it would not be sensible to conceal them, since they were the original reason for us meeting today,” said Lukashenko.
He pointed out the irony that trade is falling within the fledgling EEU, which was set up on January 1 out of the three countries’ existing Customs Union to boost trade.
Kazakhstan’s trade with its Customs Union partners plunged by 20 percent last year, and its trade with EEU member states dropped by 8 percent in January, according to government statistics.
Nazarbayev blamed the economic difficulties on “a general slowdown in the world economy; the Ukrainian crisis and sanctions policy against Russia; and also a sharp fall in global prices for our main exports – oil and gas.”
The three leaders ordered their governments to draw up an anti-crisis plan to deliver a boost in trade. But the fact they need to do so less than three months after the EEU got off the ground is a measure of the difficulties that lie ahead.