Analysis

Is the Eurasian Union really about trade?

Much coverage of relations between the CIS states and Russia or Europe has suggested a battle for political supremacy in the region. While politics explains much about what is possible, Josh Black argues that it is trade that determines what is desirable.

Perish the thought, but Armenia’s decision to join Russia’s Eurasian Union might not actually be a reflection of the country’s need for security. Although it has been much argued that Armenia is looking for a protector – particularly in light of Azerbaijan’s oil-fuelled growth – the country’s trade statistics tell an interesting story.

According to the WTO, between 2000 and 2011, Armenia’s trade (im)balance with Russia widened considerably. The following table illustrates that neatly.

Graph by the author. Source: WTO

Graph by the author. Source: WTO

With Armenia’s imports from Russia outstripping its exports, the country is badly exposed to any potential economic warfare – a favoured tactic of Moscow. This factor is not necessarily the only one at play, but it is perhaps a significant part of Armenia’s decision to join an economic Union that currently has few enthusiastic players.

The EU continues to insist that the Eurasian Union is not ipso facto incompatible with an EU Deep and Comprehensive Free Trade Agreement. However, likely tariff changes with the creation of the bloc may render this argument moot. Influential politicians from member states are certainly averse to extending a hand to Armenia, now it seems to have made a big geopolitical decision.

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