New Observatory on the Eurasian Economic Union (EEU)

Within LIBERTAS – European Institute GmbH, there is from beginning of April 2015 an observatory on Eurasian Economic Union (EEU) affairs – ranging from the history of Eurasianism until the most topical developments like e.g. the possible preparations for a common Eurasian currency. It is mainly intended for access out of the European Union and for scientific purposes, but it is open for requests and cooperation throughout the world. The EEU is at present composed of Russia, Belarus, Kazakhstan and Armenia (since 1.1.2015); Kyrgyzstan will join on 1.5.2015. The Russian president V. Putin has said he wants the whole former Soviet republics, except the Baltic Republics, to form the Eurasian Economic Union.

This EEU Observatory will start working on an informal basis, and is headed by Ofelya Sargsyan M.A. The Armenia-born political scientist is also Junior Editor of European Union Foreign Affairs Journal (EUFAJ); see http://www.libertas-institut.eu/de/EUFAJ/Ofelya_Sargsyan.pdf. The output will be an archive and database, articles, discourses and lectures, advice and papers for government level, non-governmental organisations (NGOs), conferences, company purposes etc. Any later news will be published on Facebook, on the blog https://libertasblogs.wordpress.com, or on www.eufaj.eu as well as in EUFAJ.

The EEU cannot be compared directly to the European Union, neither with its background, nor with the political system of its member states and the degree of voluntary participation. There is a strong knowledge deficit about it in the EU and other countries. While it is totally legitimate to integrate also economies of CIS countries, there is, however, also sometimes the call for a new ‚empire‘ behind the attempts to set up a Eurasian Economic Union.

The Eurasian Economic Union’s Plans for a Common Currency: Altyn or Euraz?

The Eurasian Economic Union is a Russian-led project. On the way of forming it, then Prime Minister Vladimir Putin announced that from January 1, 2012 the Common Economic Space of Russia, Belarus and Kazakhstan would be created, which would pave the path for the establishment of the Eurasian Economic Union. Thus, the Custom Union (CU) of Russia, Belarus and Kazakhstan, launched in 2010[1] was evolved into the Single Economic Space (SES) on January 1, 2012 with Armenia announcing about its interest to join the project on September 3, 2013.

The Eurasian Economic Union was put into force on January 1, 2015. Its purpose can be correlated with Russia’s competitive disposition with the EU, regarding the post-Soviet Union countries. Additionally, the initiative can be Russia’s attempt to counterbalance the EU’s appeal and influence.  Hence, whereas Russia claims that integration is beneficial for all the parties engaged, in reality the picture is not that clear-cut. One of the causes are the political systems and structures of the member states of the Eurasian Economic Union – they are not democratic, disposed to corruption and instrumentalization of law. Another evidence is Russia’s aggressive policy of recent years. Moreover, the country’s superior position in shaping the EEU also comes to prove that the project is actually a simulation of integration. The EEU seems to be driven forwards by forceful integration, which is becoming less and less favorable for the member states except for Russia, per se.

Hence, the EEU’s functioning will mainly be dependent on Russia which seeks to push integration involving more and more spheres from which it can get utmost benefits. Such an opportunity appears to be the introduction of a common currency within the EEU. Thus, while other founding members states of the project have been less supportive to such a plan and have been increasingly imitating integration rather than opting for it[2], on March 10, 2015, Russian President Vladimir Putin instructed the Central Bank of Russia and the Government „to determine the potential dimensions of the integration in the monetary and financial sectors in the framework of the Eurasian Economic Union with a study of the feasibility of establishing a monetary union in the future.“ Putin’s this instruction is to be worked out together with the central banks of the member states of the EEU by September 1, 2015. And the new currency can appear already in 2016[3].

Among many issues the establishment of a monetary union presupposes introduction of a common currency.  Hence, according to the documents ratified by Russia, Belarus and Kazakhstan in May, 2014 in Kazakhstan, a Eurasian Central Bank and a common currency was supposed to be established by 2025[4]. To the point still in 2014 Rinat Abdullin, the chairman of „Altyn Kara“ Bank, stated: „Personally, I see absolutely nothing wrong with the introduction of a single currency for our three countries. Many of us lived in the Soviet Union, and they remember that there was a single currency such a large area – the ruble, which was accepted everywhere. No matter whether you were going to the Far East, Siberia or Georgia – it was very convenient, because there was a confidence that all prices are formed in a common currency. This situation is much easier for business, as well as for the calculation of ordinary people“[5].

Yet, the Russian president decided to accelerate the process and this at a time when Russia faces a serious economic crisis and the ruble has practiced a severe depreciation[6] as a result of which the amount of mutual settlements among the member states of the EEU in dollars has increased. Moreover, the West speculated to turn off Russia from the interbank payment system SWIFT, yet to make transactions, say from Russia to Kazakhstan, it is necessary to obtain confirmation from the American settlement centers. Obviously enough, the tense foreign policy pushed Putin to rush with the initiative.

In reaction to the initiative, Armenian Central Bank Board member Armenak Darbinian stated, “there is no document among those signed [by Armenia] within the framework of its accession to the EEU that would concern the feasibility study or prospects related to this matter (introduction of the common currency)… There have been no negotiations, no formal discussions in this direction yet. I would say more: the issue of forming a single financial market regulator was discussed within the framework of the EEU and it should happen after 2025. During this time, national laws and regulations should be harmonized and only then the issue can be put on the agenda. It cannot be an administrative decision. This requires relevant developments in the economy and in the financial markets”[7].

Yet Prosperous Armenia Party former MP, economist Vardan Bostanjyan considers it quite feasible that Armenia incorporates a common currency with the EEU. He adds that it will have a favorable impact on the country, saying that “solely by the fact that quite a number of Armenians are in that [EEU] region; the word is about the migrants who are having losses in the case of [currency] exchange rates. But, now, they will not have that”[8].  However, there are also contra opinions. As such Armenian economist Ashot Yeghiazaryan said, “If we switch to the ruble, or another Eurasian currency, and if our Central Bank begins to keep its funds in that currency, discrepancies will arise between the currency loans, and our entire microeconomics will deviate”[9].

It is to be mentioned that the idea of establishing a common currency has not been accepted straightforwardly also in Belarus and Kazakhstan. The director of the Institute of the Global Political Economics of Kazakstan, analyst Akimbekov Sultan said that the instrumentalization of a common currency should not be an issue of a near future. He states that while the idea is interesting there are apparent problems – all the member states have different levels of development. Moreover, Belarus has not yet undergone those market reforms that, say Russia and Kazakhstan went through.

Belarusian columnist from the Belarusian Radio Liberty and political scientist for the „Strategy“ center Valery Karbalevich stated, “And if we are talking whether the Member States of the EEU in general should have a single currency, I do not think that Kazakhstan and Belarus will agree. This would mean that these countries lose their sovereignty”[10]

With all the events, facts and discussions at stake, it is still to be mentioned that it is totally unthinkable that, for example, during the creation of the euro in the years 1990-1999 (Maastricht Treaty to book-money introduction[11]), and this since the Pierre Werner Plan from 1970, one president would have given a commando to „his“ central bank ordering a study on the possible common currency, predicting its effective introduction for the next year, while the order to the central bank has gone out in March of the current year. Observers from European Union sources, asked privately, have the presumption that the Russian president has an „economic psychogram“ being somehow „actively jealous of the EU acquis communautaire“ which he wants to be caught up rapidly, and „while common currencies are to be welcomed in general, any too fast introduction can damage the participating states considerably“, even if the central bank of the integration is not de facto independent.

As for the idea of the Eurasian currency, on the whole, it dates back to 1994 when the President of Kazakhstan, Nursultan Nazarbayev proposed the notion. In 2012 Vladimir Putin endorsed the idea. The Kazakh President has never been suspicious to reset Soviet Union or Soviet Union 2.0., he was however all the time for economic integration, until a certain time in Central Asia[12]. Concerning the currency within the framework of the EEU, it is said to be similar to the Russian ruble. As for the name of the forthcoming common currency two options, are being discussed – Altyn and Euraz. The first name – Altyn, mentioned by Nazarbayev in 2014, meant a three penny coin in Old Russian and the word itself stems from the Golden Horde. The second name – Euraz, is parallel to, or a kind of imitation of the Euro[13].

It is envisaged that the key element in sustaining the new currency will be raw oil exports from Russia and Kazakhstan. Therefore, it has been decided to base the Central Bank of the EEU in Almaty, Kazakhstan. Evidently, the involved EEU governments want to rely more than ever on oil and gas exports, which is diametrically opposed to what also Russian economists preach. The potential market will include about 180 million people, with the total volume of GDP being more than $ 2 trillion.[14]

Yet, it is under a question whether the member states of the EEU, can indeed make the functioning of a common currency a reality. All the currencies of the member states currently face fluctuations and to avoid this in the event of a common currency additional resources will be required. Moreover, the efficient functioning of the EEU per se is also dubious.

Ofelya Sargsyan

Ofelya Sargsyan M.A. (AUA Yerevan), M.A. (Univ. Flensburg) is Junior Editor with European Union Foreign Affairs Journal (EUFAJ) and a Political Analyst with LIBERTAS – European Institute GmbH.

 

[1]Rilka Dragneva & Kataryna Wolczuk, Russia, the Eurasian Customs Union and the EU: Cooperation, Stagnation or Rivalry?, Russia and Eurasia Programme,  Chatham House, Briefing Paper, August 2012, p. 4, http://www.chathamhouse.org/sites/default/files/public/Research/Russia%20and%20Eurasia/0812bp_dragnevawolczuk.pdf.

[2] Aleksandra Jarosiewicz, Ewa Fischer, cooperation: Tomasz Bakunowicz; The Eurasian Economic Union – more political, less economic, Centre for Eastern Studies NUMBER 157,  20.01.2015, p. 1-7

[3]TASS Russian News Agenccy, (Информационное телеграфное агентство России (ИТАР-ТАСС), Putin instructed the Central Bank and the Government to work out the possibilities of creating a monetary union in the EEU (Путин поручил ЦБ и кабмину изучить возможность создания валютного союза в ЕАЭС), March 10, 2015, http://tass.ru/ekonomika/1817884,

Radio Azatutyun, Armenia Not To Attend Meeting Of Trade Bloc Partners, March 18, 2015, http://www.azatutyun.am/content/article/26891807.html

Naviny.by, Putin instructed to work out the possibilities of creating a monetary union in the EEU (Путин поручил проработать вопрос о создания в рамках ЕEU валютного союза); March 18, 2015, http://naviny.by/rubrics/finance/2015/03/10/ic_news_114_455255/

Читать полностью: http://naviny.by/rubrics/finance/2015/03/10/ic_news_114_455255/

[4]Banknoteinfo.net, Eurasian Economic Union plans to adopt common currency unit , August 13, 2014, http://banknoteinfo.net/eurasian-economic-union-plans-adopt-common-currency-unit/

[5]East Time, Introduction of Altyn will Be Useful for a Eurasian Union, Tuesday, May 13, 2014, http://easttime.info/news/kazakhstan/introduction-altyn-will-be-useful-eurasian-union

[6]Pravda-TV.ru, By Putin’s instruction a common currency of the EEU  will be launced  in 2016: Altyn or Euraz? (Единая валюта ЕАЭС по поручению Путина появится в 2016 году: «алтын» или «евраз»?) http://www.pravda-tv.ru/2015/03/10/129883

[7] Asbarez.com, ‘No Plans Yet’ for Armenia to Adopt Single EEU Currency, March 11, 2015, http://asbarez.com/132864/%E2%80%98no-plans-yet%E2%80%99-for-armenia-to-adopt-single-eeu-currency/

[8]News.am, Economist: Armenia will benefit from Eurasian Economic Union single currency, March 13, 2015, http://news.am/eng/news/256734.html

[9]News.am, Armenia economist: EEU single currency is foolish, March 14, 2015, http://news.am/eng/news/257002.html

[10]Mariam Grigoryan, 1am, (The approach to the single currency of the Eurasian Union is ambiguous in Belarus and Kazakhstan) Բելառուսում և Ղազախստանում միասնական արժույթի վերաբերյալ կարծիքը միանշանակ չէ, March 14, 2015, http://www.1in.am/1572943.html

[11] Before the Euro has been introduced as cash currency in 2002, it had been at disposition as book-money, on bank accounts only, since 1999.

[12] Hans-Jürgen Zahorka, Strategy Options for Central Asian Integration –For a Central Asian „Cecchini Report”, EUFAJ 1 / 2010, p. 116,  www.eufaj.eu

[13]Interpolit, Oil altyn against the dollar banknote (Нефтяной алтын против бумажного доллара);  11.03, 2015, http://politobzor.net/show-47317-neftyanoy-altyn-protiv-bumazhnogo-dollara.html

[14] Russian Telegraphic Agency (Русское Телеграфное Агентство), „Instead of the ruble – Altyn. Eurasian Economic Union opts into a new currency (Вместо рубля – алтын. Евразийский союз переходит на новую валюту), March 12, 2015, http://www.riata.ru/ekonomika/item/716-vmesto-rublya-altyn-evrazijskij-soyuz-perekhodit-na-novuyu-valyutu.html

 

EU Peacekeepers for Nagorno-Karabakh?

The Armenian and the Azerbaijani media are full, at present, with speculations about a possible war in the South Caucasus. This is, unfortunately, not excluded, although all logical thoughts lead not to a war – but what means logic in this context. Fact is that many soldiers have already lost their lives and even civilians have been shot or wounded. So creative solutions are requested.

This leads to the possible call for peacekeeping troops. Indeed, they should be deployed rather sooner than later, when there is still a bit of peace existing; otherwise they would have to overcome a lot of difficulties, if those could be overcome at all. As usual, it is better to intervene at an early stage than too late. Of course, there should be a consent who should come. This consent should include Armenia and Azerbaijan.

There is much discussion now about Russian peacekeepers in Nagorno-Karabakh. This would if at all accepted with a grim face of the two mentioned countries, and by Nagorno-Karabakh. Russia has a security agreement with Armenia, and at the same time sold weapons for four billions USD to Azerbaijan – so its credibility can be heavily criticised. No country could have better expressed its interest in having no peaceful settlement.

NATO or US troops would not be accepted by Russia, and everything including US troops even as peacekeepers may be considered as too much of an „intruder“. Although of course possible, it may be perceived as a certain provocation which might need a lot of efforts to explain. OSCE troops as such are not likely; the OSCE has observers only in likewise conflicts. UN troops are theoretically possible, but if one looks to some African missions by the UN I think under efficiency criteria it should be avoided, if possible, that the UN which otherwise is also rather inflexible (UN Security Council) should be switched in in an operative way.

However, the EU – which has not yet been asked but can submit the offer to Armenia and Azerbaijan – could and should be ready for a new role as peacekeeping power. The region is limited, the task as well, the supply ways to it may lead via Turkey which is not only NATO Partner but also associated to the EU. Another way could lead via Georgia. The EU is, from outside and inside, more and more asked to take over a higher responsibility in world politics, above all in its own backyard. It is not suspect to remain too long in comparable missions – just in contrary. Its mandates are repeatedly discussed, also in parliaments and this on EU and Member State level. EU troops would be accepted as nobody can have anything against the EU, and this in Azerbaijan, in Armenia, but also in Nagorno-Karabakh. As long as nobody would start shooting, it can be expected that any EU peacekeeper force would behave as much „gentlemen-like“ as imaginable, including cooperation of the troops in civil reconstruction, and this on both sides of the front line.

There is also one more reason for an EU-led peacekeeping force: the Eastern Partnership. This could be the first real opportunity for the Eastern Partnership to prevent actively any conflicts on its territory. And if Georgian ,Moldovan or even Belarusian troops should be included (the latter do not include the President), why not? Ukraine may be too heavily charged with its troops at present, and Azerbaijani and Armenian inclusion into the peacekeeping forces should normally be excluded.

Of course, this makes only sense if both sides are ready to negotiate at the same time. This could be a task for the summit meeting in Sotchi/Russia on 8th August 2014. Russia should have all interest to return to the table with the EU and prove that its government can also be rational. It may make sense also for the OSCE Minsk Group, and if not possible there, also for a new round, this time under the auspices of the EU.

And it needs a keen but realistic vision for the EU, which here could show it can look beyond its Member States‘ horizons. The Eastern Partnership framework is, of course, the backyard of the EU, even explicitly.

Hans-Jürgen Zahorka

Chief Editor, European Union Foreign Affairs Journal

http://www.eufaj.eu

 

 

New issue of EUFAJ (1-2014): Here are the Headlines

A new number of European Union Foreign Affairs Journal is out: 1-2014. With the following content:

– The EU Internal Market in 10 Years Perspective from Accession of Ten Central and Eastern European Countries in 2004 – Lessons Learned for Eastern Partnership Partner States
– Russia under Putin and the Eurasian Union: An Impossible Possibility?
– Belarusian Identity: The Impact of Lukashenka’s Rule
– The Commonwealth of Independent States in Sequence of the Former USSR: A Tool for the Formation of the Eurasian Union?
– Forming a New Energy Security Alliance in North-Eastern Europe
– Transitioning from a Fossil-Fuel to a Green Economy: Government Policy for Private Sector Participation in Trinidad and Tobago
– The Right to Development and Rights-Based Approach to Development: Two Mutually Reinforcing Concepts?
– Stabilizing the Dynamics in the Global Socio-Economic System: Categorial Clarification for Exhaustive Transparency and Sustainability
– With book reviews on Nagorno Karabakh, Cuba and Africa

With authors from Belarus, Ukraine, Trinidad and Tobago, Switzerland, Armenia, Germany, and the USA (book reviews).

Go to the link: http://www.libertas-institut.com/de/EUFAJ/no1_2014.pdf.

Russia and the Eurasian Union: Mission Impossible?

By Hans-Jürgen Zahorka
Chief Editor, European Union Foreign Affairs Journal (EUFAJ)
http://www.eufaj.eu

The Russian president Putin may be a political chess player, but he will fail at the very end. He wants to restore glory for his country, and therefore he undertakes a lot:
– blaming the Americans and the Europeans for anything which does not function in his country, including a growing authoritarianism and repression of non-violent opposition, including as well the stigmatisation as „foreign agents“ of any non-governmental organisation which has contacts abroad (and all open-thinking NGOs have them), and following a media policy which is absurd and where critical journalists often have to pay with their lives and health,
– gathering a lot of compliments from most of his compatriots after the conquest of Crimea, and the intended destabilisation of Eastern Ukraine – and in both cases the troops there turned out to be Russian ones, although this has been denied by Putin, who did not say the truth to the world.

This is why Russia is now isolated more than ever. Even China did not veto the trend of a discussion in the UN Security Council on 12.4.2014.

All the efforts by Putin go in this mentioned direction. It is to be crowned by the project of the „Eurasian Union“ which is to see the light of the world in 2015. Since his article in Izvestiya some years ago, it is evident that this Eurasian Union should become a kind of counterpart to the EU. No problem with this; the EU is very much in favour of regional integration in the world. And nobody in the EU or elsewhere would have anything against the Eurasian Union. However, this Project is not about economic or political Integration only. It will never be possible as an integration in the worldwide sense, alone as the EU has been a totally voluntary integration. The same for all other integrations in the world. The Eurasian Union, however, is definitely not: its predecessor and economic centerpiece, the Eurasian Customs Union is going bonkers — even if this is not seen by the protagonists. Consisting of Russia, Belarus and Kazakhstan (all three beacons of democracy and human rights, as everybody knows), a lot of transborder operations go better with the help of corruption. I don’t want to mention the ranking in the Corruption Perception Index, as everybody also in Russia knows that there is still a lot of corruption in the administration. The customs tariffs are three times as high, on an average, as the import tariffs for new member countries: Armenia has either to raise its customs considerably, or get several hundred of exemptions, which makes a customs union ridiculous. Normally a customs union in economic history has always served to decrease customs, and not to increase! The Armenian government has been squeezed – under which circumstances ever – to welcome this and to tell its people that this would be a success. At the same time, newspapers write at the same page of many possible insolvencies of various sectors and drop-outs, which will lead to a continuation of the Armenian nightmare, the brain-drain by emigration. Every integration – see e.g. the accession of Spain, Portugal, Greece as well as Central and Eastern Europe to the EU – has led so far to a short to medium-term re-integration of former emigrants.

The biggest problem for Russia is her relations with Ukraine. Here every possible Eurasian Union member state can see at first hand, how they can be treated. No chance to hope that this can be changed: Russia has in all Eurasian structures since many years the absolute majority of votes. No way with a qualified majority, which in the EU can easily serve as an instrument of balancing the interests and of creating a compromise.

The result of the Crimea action has been to suspend Russia’s voting rights in the Council of Europe and to be subject of a negative assessment by the UN Assembly.

And nobody will invest at present in Russia, if he is mentally normal (except some big operators who are of strategic interest for Russia): The Moscow government had declared that it might confiscate foreign investmnt. This is against all rules, the rule of law, the rule of any international economy and above all the interests of Russia herself. Every small and medium enterprise will refrain from investing – and this in an era of positive globalization. Only a former KGB chief who never saw a company from inside can ride on such a wave. Russia is also dependent of its raw material and energy sales. The EU, including Germany, as main client are working since a while to diversify their purchases, a step which is getting momentum, and of developing alternative energy.

As the present macroeconomic trends indicate, Russia’s economy goes slowly but safely down, like the ruble currency, thus problemizing all foreign purchases which will be necessary also for domestic investment.

There are some people – like the author of these lines – who remember the hospitality, the fine humour, the philosophical discussions even with non-philosophers, the great nature, the food, the interesting history, the excellent education of Russian people. Their economy could become more and more efficient, corruption could go down, a numerous middle-class could emerge, Russians (all, not some) would go for holidays to the EU and worldwide, and will not flee their country, NGOs could form a vital civil society, art and music could thrive, and all problems could be discussed – why not controversially – and then solved in a free parliamentary vote. And the parliaments are correctly elected, and why not letting all parties admitted for this? Towards the outside, Russia could have excellent relations with its neighbours, with the EU (there are many years homework on what has been proposed and not done, like a free trade agreement etc.), with NATO, just to name some. In such a climate, NATO could become a historical structure – maybe with Russia as a member.

Instead of this, the former KGB chief in the Kremlin does not refrain from lying to the world, from attacking Crimea (at least. until tonight, 14.4.2014), and arresting many people who demonstrate against this in Moscow these days.

It is, simply speaking, ga-ga that at the beginning of the 21st century Russia, while all the others, or most of them, try to cooperate, falls back into the 19th century. If these ideas cannot convince the people (who should not behave like a flock of sheep), they feel a minority complex, manipulate the media and threaten other countries with tanks at their borders. They also are misled by this foreign activity from domestic and grave deficits. With this, the Eurasian Union will never function. It might be launched, but it will be a sick structure from the beginning – like many others who have been launched after 2001 in the former Soviet Union. There are brillant heads e.g. in the Eurasian Development Bank which is a kind of think-tank for regional integration and where many concepts for economic integration have been conceived. But in their concepts you do not read anything about the necessity of a free will of the member states to follow this integration. What their people have, the Russian government has not: sovereignty. The sovereignty to live and to let live. You should take it easy, Vladimir Vladimirowich. If you would, your people would also. But I have lost any hope that this is possible under your reign, although I am an eternal optimist. So drive your country to the beton wall, including following countries. Like the system of the USSR, this „Soviet 2.0“ system, although not under Communist auspices, will be rejected by a majority of People involved when they see the middle and Long-term results – first in the partner countries, then in Russia. By educated, young people who will see how dysfunctional their own system will be, also due to their Facebook and Twitter accounts and the Internet in general. Like the integration of the USSR, of Yugoslavia which both burst in bubbles. The result will always be smaller than the original. Because of this, perhaps for the sake of its own corruption?, the Moscow government will end up similarly, in the most positive way with four or five former and present European CIS countries in or near the EU, and Central Asia may later form a kind of integration themselves. It would, after all, need another and sympathetic leader in Moscow (not only to most of the Russians but also to the world) to break up this isolation and inefficiency.

Lessons from Ukraine’s Maidan for the Eastern Partnership Countries

By Hans-Jürgen Zahorka
Chief Editor, European Union Foreign Affairs Journal

http://www.eufaj.eu

Today night, Saturday, 22.2.2014, Yulya Timoshenko spoke for the first time after her release on the Kiev Maidan, and the questions about the whereabouts of ex-president Yanukuvich and about what he declares now reach the field of the ridiculous. He undergoes the fate of other dictators who have been chased away, and from which fates he did not learn anything.

Now those who have political responsibilities in the EU (and not only of the EU) should however discuss what may or will happen in the next future, i. e. the impact of the Kiev Maidan on Russia and on the other European Partnership Partner states of the EU, as well as on the West Balkan and on Turkey. All these countries, except Russia, have one thing in common: they are possible EU Member States, in the making, in the waiting room. Of course, with different individual distance yet to the European Union.

First, it must be congratulated and thanked to the Ukrainian people, to the heroes – and the dead – of Maidan. This was the latest European revolution which became accelerated by the horror of those who were marched by the government against the protesters, and who felt – on their own or upon the opinion of their families, relatives, colleagues etc. – that this was too much. It is not possible to excuse the Ukrainian government of the deadly snipers who killed by one single shot protesters in an arbitrary way. We will all be witnesses to trials who will be necessary, and – for the sake of the rule of law oif Ukraine – it must be hoped that they are fair. Yanukuvoch must be aware that he might come in a similar situation as Ceaucescu of Romania. Because the state Forces who served him without thinking on their role may become disappointed in a way that they might take revenge.

The impact of the Ukraine events may be also a heavy load on the present Russian government. What e.g. Foreign Minister Lavrov said shortly before and after Yanukovich was lifted out of his position by the Ukrainian parliament, went into a direction, which implied that he has not learnt anything. While Russian (state) TV was a bit more diplomatic, it can be expected now that the Kremlin tries out (again) the collective intelligence of its own people, civil servants and politicians. That means without doubt, that there will be also protests, demonstrations etc. in Russia. But the Kremlin would be totally wrong to react with the usual hard measures: police, arrests, trials, the modern gulag etc. The way, the Kremlin will react on the next demonstrations will indicate if they have learnt anything. It they react as harsh as ever, this may end up in a similar situation like in Ukraine, especially after Sotchi. Of course, the EU played a bigger role in the Ukraine, with its Draft Association Agreement, than in Russia, as Russia is not waiting ante portas of the EU – but it is clear that the so-called „European values“ will now play a bigger role: pluralism, democracy, participative democracy, tolerance, human rights, the rule of law (in all its facets), solidarity, equality, non-discrimination etc. Article 2, 3 et al. EU Treaty (Lisbon Treaty) will be a guiding line for all the countries which are or were foreseen for Putin’s Eurasian Union.

This Eurasian Union, if it were a pragmatic integration tool alone, would not be a problem for the EU. But evidently Putin wants to restore „Soviet Union 2.0“. And the predecessor of the Eurasian Union, the Eurasian Customs Union, is, I am sorry, „ga-ga“. Because e.g. Armenia has to raise its import tariffs from the member countries now from 2,7 to 6,5% to become a member of this Customs Union. There are moer than 800 kinds of goods which should be exempted. This is a huge task to negotiate, and then the Armenian government has to allow to be asked why they want at all into this Customs Union. Any integration System which raises tariffs and therefore prices works against the people – for whom it is originally intended to exist. The EU knows this perfectly, and the Armenian government knows this, but they act against all reasons. It is difficult to understand the Armenian people to swallow this, and above all the government in Yerevan to accept this in principle. The Association Agreement would not have jeopardized any close cooperation between Yerevan and Moscow. The objective of the Association Agreement EU / Armenia would have been the decrease – until zero! – of any custom tariffs, and a free access to the EU Single Market, which is a unique success story for every participant country. The other member states of the Eurasian Customs Union Belarus and Kazakhstan, who take this Customs Union as serious as it merits, sometimes shake their head in view of the Armenian eagerness to join this. Nota bene: Armenia had declared their attachment to the Customs Union on 3rd September 2013, after having celebrated the end of negotiations of the EU Association Agreement/DCFTA only on the 24th July, 2013. Both are imcompatible. This, of course, is the product of pression by Russia,and of nothing else, except an evident weakness in negotiations with Russia from the Armenian side. How this was communicated afterwards, was not subject to any beauty contest, and many European politicians ask themselves now, if they can trust any Armenian declaration. But to complete this, it must be said in the same moment that also Azerbaijan policymaking has many deficits, like e.g. the breach of Council of Europe conventions.

From the Eastern Partnership countries, Georgia and most probably Moldova will continue their way to the EU. Of course sometimes with small curves, but here may be optimism the appropriate position. Armenia will, if it really implements the Customs Union laws, soon be disappointed, and I do not exclude a kind of civil society-based movement there pleading openly for an accession to the EU. This would, of course, also help Armenia towards its problems with Turkey (and also Turkey with Armenia), and with Azerbaijan, including the issue of Nagorno-Karabakh. Azerbaijan will probably not be the Primary subject of any Maidan fallout, as the president, Ilham Aliev, has the Country in not too democratic grips – but in general, the opposition against the present system will be encouraged as well, and nothing can be excluded – and Azerbaijan may be the most corrupt Council of Europe Member State.

Rests still Belarus, the 6th Eastern Partnership Partner state. In Belarus, where many activists helped on the Maidan (and some of them have even been killed by the Berkud Police Forces and/or the Secret Service sniper units), this may become an issue. Above all, the economic situation of this country is deplorable, and it can not be expected that Russia feeds open-end barrels without bottom. So Belarus will soon have another look for more EU support. Belarus is a country which cooperates already now, so far it does cooperate, correctly with the EU. This is not the way its president Lukashenko preaches, but it – and he – does.

After all, there will be further centripetal power of the European Union. The EU is not a nationalist event, nor a military or likewise system (as the German party „Die Linke“ recently said), but a chance for all of the Eastern Partnership countries to join. Sooner or later this will happen, and we are now exactly in the situation when the Soviet grips have been loosened to the e.g. Baltic countries in the early 1990s – states are today seasoned, experienced and very positive European Union members. After all, the EU enlargement policy will get a new boost, even if the issue of enlargement is not explicitly pronounced – as the EU often had fears to tell it to its own people. This has to finish, and in the EU everything which has to come has to be discussed. The Ukraine events have probably woken up the EU citizens, or a great deal of them, and the fact that the next Ukrainian election will be held on the same date as the 2014 European Parliament elections, namely the 25th May, indicates that Ukraine is now ante portas as well. Maybe not in the next 5 or 10 or even more years. But nobody should forget that e.g countries like Latvia have been a EU Member State exact 10 years after the application was made. And that the economic development of all new Central and Eastern Member States went into the right direction. It is not necessary that the same economic Level has been reached by any future member state immediately – it is only important that the economic policy follows the right direction, to join the EU which has also high disparities within its Member States.

So, nobody should be astonished, if in other Eastern Partnership states, like e.g. Armenia, Azerbaijan, Belarus, or in Russia, or in Bosnia-Herzegovina or Turkey, similar movements like on Maidan might occur.

New Book by Gohar Yeranyan: Acemoglu’s Model and the Reality. Dynamics of Economic and Political Power in the Former Soviet Union Countries

This study came – not planned – at the right time: when Russia tried by its policies to exercise pressure on its former parts which are now before their respective Association Agreements with the EU, as member state of the Eastern Partnership. It serves to find criteria for a dynamic development in politics and economy, based on a Master thesis at the American University of Armenia, dealing with a model of the Turkish-American economist Acemoglu, and tries answers on questions like „Under which circumstances democracy can prevail?“ in the former Soviet Union countries (FSU). Six of them have been selected for this „detective story“ among the descriptions of transition: Armenia, Belarus, Kyrgyzstan, Moldova, Russia, Ukraine. But the models of public institutions and private groups‘ behaviour are different from country to country, and the effects of transition sometimes contraproductive – be it under the „big bang“ or under „gradualism“.

Gohar Yeranyan investigates systematically the functions of the elite, the oligarchs, the interest groups, the system-immanent changes, inequality, the revolutionary potential (end the evolutionary possibilities). the wealth distribution – and the persistence of political institutions. In this context, she discusses different paths of political developments in the FSU reality, possible reasons of democratization, as well as the dynamic model by D. Acemoglu – one of the most promising economists today, as well as the role of incentives for the political and economic change in former Soviet Union countries, before giving an overview of economic development paths of the FSU countries (shock therapy versus gradualism).

She is clearly pleading for a EU-approached democracy which is more likely than any other system to keep the different interest groups balanced, and can create more GDP and popular wealth which is not only restricted to an oligarchy. This includes also that the different states should also follow an outspoken social policy. A very refreshing book (from the EU or a US perspective, for example) – and a very necessary one (from the FSU states‘ view), and a very adequate one in view of the latest discussions in the EU’s Eastern Partnership countries.

004_Pic_Gohar_YeranyanThe author, Gohar Yeranyan, lives in Yerevan/Armenia and belongs to a new generation of future Armenian leaders. She studied first for her B.A. and M.A. in philosophy and psychology at Yerevan State University, with a Master thesis on Bergson’s intuitivism, and then for another M.A. in Political Science and International Affairs at American University of Armenia (AUA). She stands for a cross-skilled approach to all scientific questions and is far away from any monolithic look about one discipline. A member of the Non-Governmental-Organization “Democracy for Development”, she has gained experience in work-life as a loan officer for a loan organisation, as a trainer for the Foundation for the Preservation of Wildlife and Cultural Assets (FPWC), giving training in leadership and intercultural communication, and in a lectorship or scientific books.

Gohar Yeranyan: Acemoglu’s Model and the Reality –
Dynamics of Economic and Political Power in the Former Soviet Union Countries
Libertas Paper 78, 48 pages, October 2013.
ISBN 978-3-937642-45-1 – e-book/PDF 4,99 EUR; e-book/Amazon Kindle version 4,99 EUR;
ISBN 978-3-937642-46-8 – Paper Edition 15,00 EUR

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Armenia, the Russia-led Eurasian Customs Union, and the European Union: Will the Finality be Armenia’s Accession to the EU?

By Hans-Jürgen Zahorka

Since 1999 I was several times in Armenia, in journalistic missions and as Government Advisor, mainly for the EU. In 2003, during an assignment in AEPLAC (Armenian-European Political and Legal Advice Center), I had some spare time and wrote, after thorough consultations mainly with three former ministers (economy, finances) a scenario on Armenia’s accession to the EU. At this time, there was a very positive thinking towards a more active European policy in wide parts of the government and public life, and one of the „spinoff“ products following the essay I wrote was that there was soon the founding meeting of the Armenian chapter of the European Movement.

In the years to come, this article was more quoted and discussed (e.g. in Internet fora) than it could be expected. It can be seen in English on the Website of LIBERTAS – European Institute under: http://www.libertas-institut.com/de/PDF/Armenia%20ante%20portas.pdf, and in 2003 there was also a German version (it is not easy to translate as a German one’s English text into German, I remember) in ADK 1-2/2003 (Armenisch-Deutsche Korrespondenz, Vierteljahresschrift der Deutsch-Armenischen Gesellschaft), which was also published on our Website: http://www.libertas-institut.com/de/PDF/ArmeniaDE.pdf

Now we are in the situation that Russia is actively reluctant against an orientation by some of the former parts of the Soviet Union towards the EU. Besides the legitimate question, if Russia’s government does not try to turn back the wheel, it must be said that the Eurasian Customs Union as first stage of a Eurasian Union is of course, as a regional integrstion, fully legitimate – but it has to be taken into accouont that a regional integration can function only if the participant countries go voluntarily into this integration. But as we see and what has not be mentioned in detail (well, if someone wants, this is possible of course), Russia tries almost everything to „keep“ the European CIS Member States (Georgia has left the CIS in 2008) – Belarus, Azerbaijan, Armenia, Georgia, Ukraine and Moldova – on a lane leading to the Eurasia Customs Union, and later to the Eurasian Union. Belarus and Azerbaijan are not able to come closer to the EU, at least not under their present governments. Ukraine, Moldova, Georgia and Armenia have negotiated an Association Agreement which is the successor of the PCA (Partnership and Association Agreement) from the late 1990s which was valid 10 years with automatic extension until it would be replaced by ist successor agreement – the Association Agreement (AA). In addition and a „goodie“ for the economies, there is also a DCFTA – Deep and Comprehensive Free Trade Agreement which should be signed at the Summit Meeting of the Eastern Partnership end of November 2013 in Vilnius/Lithuania.

But Russia wants to prevent this: Moldovan wines can at present not be exported to Russia (for „standards‘ reasons“ – but the EU which has widely feared very high standards to food imports does continue to import Moldovan wine …, and there are indeed no Quality changes to the worse with the good Moldovan wines), Ukraine exports to Russia have been stopped at the borders by the Russian administration, until Ukraine and the EU coughed … Georgia – well, their Prime Minister said, we will consider the Customs Union, but we have at present no opinion on this – this was quite friendly to MOCKBA, but it raised a domestic furor in Georgia, and the Prime Minister will leave office soon. Anyway, Georgia had a short armed conflict in 2008 with Russia, and since then, and not only then, the relations between both are a bit suspended asymetrically, and they cannot be called „normal“. In Georgia, there is an all-party coalition in favour of more European integration, and this did not change at the last general election.

The orientation of these four Eastern Partnership countries, including Armenia, towards the EU has been evident as the EU in the framework of its European Neighbourhood Policy (ENP) has always tried to reform these former kommando economies – with a huge amount of detailed legal approximation which had and still has to be implemented. This covers among others competition and state aid policy, de-monopolization, pegging to technical EU standards and norms (which are relevant far beyond the EU), regulation of utilities and transport (rail, air traffic etc.), intellectual property rights, energy and environment law etc. Russia and its Customs Union remain advocating some key sectors, like railway, energy, telecommunications. Indeed, Russia holds all or big parts of these sectors in Armenia, and they are strategic. One has also to take into account that there are long and deep (and emotional) links in providing security from Russia for Armenia. However, one has also to ask what Russia did objectively that the Nagorno-Karabakh conflict was won by the ethnic Armenians from there in the beginning of the 1990s, and why Russia which has army bases in Armenia has now committed to provide Azerbaijan (which implicitely has threatened several times Armenia to conquer back Nagorno-Karabakh by the use of force) with arms worth several billions of euros. There were evidently Russian pressions, at present unknown in detail, on the Armenian President, to agree during a summit meeting on 3.9.2013 to include Armenia into the Eurasian Customs Union and later into the Eurasian Union. No politician would have said this without any pressions, just six weeks after four years of negotiations with the EU, having praised the objectives of these negotiations all the time. Big parts of Armenian civil society are protesting this, the European Parliament has adopted on 12.9.2013 a multi-party tabled motion quasi unanimously, and we had to state, too, that the European media did not much react on all of this…

The EU Commissioner Stefan Füle made very clear comments before the European Parliament on 11.9.2013. It is not necessary to repeat them here, just see http://europa.eu/rapid/press-release_SPEECH-13-687_en.htm. The question is what will be the finality of Armenia vis-à-vis the European Union. I know many Armenians who fit fully into the pattern one has for an EU citizen, and the whole country’s culture is on one line with the EU, and nowadays the political culture more or less, too. Now, with the DCFTA many, even uncountable new links for small and medium enterprises could emerge, and this would really bring the country Forward. The expectations are in solid double-digit numbers for the growth of the Armenian GNP, if the DCFTA will be in power, within several years. Both, the Eurasian Customs Union and the DCFTA, are not compatible, and Armenia which cannot even form a common customs territory with the Customs Union, would be worse off with having signed both. So the moment of truth approaches:
– will Armenia sign only the AA plus DCFTA (they belong together, as a double-pack), which would require some explications to Russia (if they insist),
– or will it sign only the AA and not the DCFTA (which will cut the wings of the AA in a wide, yet unknown extent, and would stall the ongoing reform efforts of the country to be on line with the social market economies of the EU, and would also endanger trade flows – Armenia has more foreign trade with the EU than with Russia; statistically it is evident, but the EU Member States are counted separately, although the EU follows one Common External Commerce Policy, art. 206 et al. TFEU/Lisbon Treaty, and is counted in other countries as one statistical unit),
– or will it sign the Customs Union Treaty only, indicating this by a non-signature of the both agreements with the EU? Then it would give green light to oligarchs, more strategic investment by Russia and on the Long run an oligarchy and no competition at least in the relevant sectors. The whole country would be set back as it would not be reformed in a continuous way. It would then opt to be on one line with the economies of Russia (which has raw materials, different from Armmenia), of the ridiculous dictator-determined one of Belarus, and of the Central Asian System – and I mean very Central Asian!. and it is not the place to speak about this now and here – of Kazakhstan. Maybe Kyrgyzstan and Tajikistan will be in the boat in some months, but this can be in no way a decision parameter for Armenia.

Nobody with some brain – sorry – could understand the latter possible decision. Only dubious and shallow words by Vladimir Putin must have induced to bring Armenia in today’s impossible position, after all. The Armenian President did not look to well and happy on the TV Screen when he came out of the meetings. What has been perceived as not too positive were the assurances given by all Armenian government officials and representatives. They should remember the fact that they cannot be pregnant only to 50%.

The long-term consequence of everything is that Armenia will forward an application to become a Member State of the EU. Maybe not within the next five years – but I exclude nothing. The security issues, at least with Turkey, can and will be solved, as they are also in the interest of Ankara, not at least in view of her EU negotiations. And the more Armenia will be uncoupled from EU growth and parallel countries like Ukraine, Moldova and above all Georgia, the more the civil society trend will be in favour of the EU. The EU is not an imperialist entity, but it has a huge centripetal potential – in economy, but also in its democratic systems. And Armenia has happily a more or less functioning civil society, which can and will have a feedback on its political system. And as the EU knows perfectly that a possible „no“ to the EU by Armenia is not the will of the people and not even of the government in Yerevan (why would they have drunk so much mulberry vodka or konjak on 24.7.2013, when the DCFTA negotiations were finished?!), the doors to the EU will not be closed. And isn’t it encouraging that e.g. in EU universities there is at present made serious research on a possible roadmap of Armenia towards an EU accession?

We will publish as a book what comes out there, for the EU must say „B“ when they say „A“. It will be on the market still this year, and it will induce any discussions. And Armenia as a European country, clearly anchoring in the standards of the Council of Europe, cannot be denied any further integration – in particular as Georgia will exactly do the same, and a double-pack is easier for the EU. And last but not least, the Russian system got some further spots of civil society influence: the Mayor elections in Moscow, but also in Ekaterinburg. Under these auspices, Mr. Putin should get the next Sakharov Prize of the European Parliament to promote inconsciously European values in Armenia – or the next medical Nobel Prize, as a Polish M.E.P. has proposed with a ;), as he opened the eyes of many with his – let’s call it: funny – behaviour towards the Eastern PArtnership countries. I look forward to heated or cool debates in the South Caucasus on these matters.

EU and Azerbaijan: Setting the Record Straight

 

August 7, 2013 – 3:50pm, by Eldar Mamedov

At a cabinet meeting in mid-July, Azerbaijani President Ilham Aliyev lashed out at the European Parliament for supposedly conducting a “dirty campaign” against Baku. The shrill tone of Aliyev’s comments indicate that European pressure on Azerbaijan to respect basic rights is stinging the Aliyev administration.

The latest EU parliamentary resolution critical of Azerbaijan came in June, when European officials called for the release of Ilgar Mammadov, a jailed leader of the opposition Republican Alternative movement. Euro-criticism in 2012 included the loud and public condemnation by European MPs of an officially orchestrated smear campaign against independent investigative journalist Khadija Ismailova. [Editor’s Note: Ismailova has worked as a contributor to EurasiaNet.org].

Aliyev, who is expected to travel to Brussels to confer with top EU officials in the fall, showed himself to be sensitive to criticism. At the July cabinet meeting, he dismissed the recent European assessments of Azerbaijani policy as the work of a jealous few. “There are still prejudiced people, [European] parliamentarians who do not accept Azerbaijan’s success, and they are systematically trying to make attacks on Azerbaijan,“ he groused, according to comments broadcast on state television.

While official statements critical of Baku’s behavior have succeeded in vexing government officials, if European criticism is actually going to be effective in getting Aliyev & Co. to change its authoritarian ways, it’s important for European officials to dispel some persistent myths among Azerbaijani policymakers surrounding EU actions. Here are a few widely held assumptions in Baku that European officials should keep in mind as they consider taking the next steps: 1) European criticism of Azerbaijan´s human rights record is the work of the pro-Armenian lobby and other actors who wish to undermine Azerbaijan´s „independent foreign policy“. Not true. There is no evidence that the members of the European Parliament who are critical of Azerbaijan´s rights practices have any connections to the Armenian lobby or to Russia, which is believed to want to re-integrate Azerbaijan into its own sphere of political and economic influence. In fact, some critical Euro MPs, such as the Austrian Green Ulrike Lunacek, are on record as demanding the withdrawal of Armenian forces from occupied Azerbaijani territories surrounding Nagorno-Karabakh. The reason for European criticisms is simple: the situation of the human rights is deteriorating, in spite of the commitments undertaken voluntarily by Azerbaijan. When the EU offers criticism, it is simply assessing the country on its own merits.

2) Demands for democratization and respect for human rights are nothing but a smokescreen to promote the regime change. Not by a long shot. The last thing the EU wants is a new source of instability in an already combustible part of the world. In fact, the EU is quite comfortable with the Aliyev administration, as long as it delivers on energy cooperation and regional security — particularly counter-terrorism, Afghanistan and Iran. But for the sake of its own credibility, the EU cannot completely ignore human rights issues. It is also in the EU´s self-interest: it needs a government in Baku with enhanced domestic legitimacy as its partner. Its message to Aliyev seems to be: better to start reforms today, while you can manage a controlled transition from a position of strength, rather than to risk a popular explosion tomorrow. But if the government persists in tightening the screws, and in the meantime, a viable opposition emerges, the calculus might shift in favor of the latter.

3) Azerbaijan is unfairly singled out and is a victim of double standards. Yes, there are double standards, but they actually work in favor of Azerbaijan. For instance, the European consensus holds that Belarus has nine political prisoners. In Azerbaijan, there are at least several dozens of them. Yet several Belarussian officials are subjected to EU travel bans and an asset freeze, while the EU has never even considered similar measures against Azerbaijani officials. Furthermore, ODIHR, the OSCE’s democracy watchdog, has never recognized presidential and parliamentary elections in both Belarus and Azerbaijan as free and fair. But it is only the Belarussian parliament that is not recognized as such by the European Parliament, and which is banned from participation in EURONEST, the parliamentary dimension of the Eastern Partnership. Azerbaijan´s Milli Mejlis delegation, on the other hand, enjoys full participation rights in inter-parliamentary bodies.

4) The EU ignores the Armenian occupation of Azerbaijani lands and the human rights of Azerbaijani IDPs. Not true. The European Parliament adopted a resolution in 2010 on the need for an EU strategy in the South Caucasus (known as the Kirilov Report) in which it clearly calls for the withdrawal of Armenian forces from all occupied territories of Azerbaijan, and upholds the right to return for Azerbaijani IDPs. In 2012, in addition to these demands, the European Parliament for the first time linked the conclusion of association agreements with Armenia to progress in the Nagorno-Karabakh peace talks, including the withdrawal from occupied territories of Azerbaijan and return of IDPs. Of course, Azerbaijan could have won more converts to its cause had it stopped sending wrong messages, such as the pardon and promotion of Ramil Safarov, an army officer guilty of the murder of an Armenian counterpart, and the state-orchestrated campaign against Akram Aylisli, a writer who dared to depict a more nuanced picture of the Azeri-Armenian conflict than is usually accepted in Azerbaijan.

5) There is no point in satisfying EU demands, since Azerbaijan will never be admitted to the EU anyway. Too simplistic. It is true that the EU has lost its appetite for enlargement, and the example of Turkey’s stalled candidacy lends credence to this assertion. But current fiscal troubles will not last forever, and Europeans might still change their mind on enlargement. Meanwhile, there are other forms of association with the EU that can be beneficial for Azerbaijan, such as association agreement, free-trade agreement and visa liberalization. Most importantly, reforms that conform to EU norms are needed not to satisfy Brussels, but to improve the quality of life of Azerbaijanis. If implemented consistently, they might even help Azerbaijan to win over hearts and minds of the residents of Nagorno-Karabakh, and solve the long-festering conflict on terms that are more favorable to Baku.

 

Editor’s note: Eldar Mamedov is a political adviser to the Socialists & Democrats Group in the European Parliament, who writes in his personal capacity.

From Eurasianet Commentary. Originally published by EurasiaNet.org; please see http://www.eurasianet.org.