Connecting the Eurasian Economic Union and the Silk Road Economic Belt: Current Problems and Challenges for Russia

russia-china-deals-cooperation2

By Ivan Zuenko

During the Putin-Xi summit that took place in Moscow on May 8, the leaders of Russia and China signed a joint declaration “on cooperation in coordinating the development of the Eurasian Economic Union (EEU) project and the Silk Road Economic Belt (SREB)”. Moscow and Beijing’s declared goal in combining the two projects was to build a “common economic space” in Eurasia, including a Free Trade Agreement between the EEU and China.

The positive implications of such a connection are obvious. Cooperating with China can provide Russia and other post-Soviet countries with much-needed funding and technologies for the implementation of large-scale infrastructure projects, primarily in the sphere of transcontinental logistics. It is this auspicious aspect of the EEU-SREB merger that has attracted the most attention in academic papers published by experts.

However, there are several factors that can complicate the implementation of the Russo-Chinese agreement. First of all, we should note that there are still no tangible manifestations of the decision to combine the EEU and the SREB. The roadmap for the combination of the two projects still needs elaboration. The most logical way to do this is by creating cooperative platforms for discussion, such as working groups composed of government officials (up to level of vice-premiers), scientists and subject-matter specialists. The creation of the necessary mechanisms and institutions acceptable to all parties involved is unlikely to be a fast process and may take years. Both the EEU and the SREB envision the integration of Central Asia states, which represent overlapping interests of Russia and China and, therefore, any formal negotiations should include representatives from all states involved in both projects. Discussions in such multilateral formats usually require substantially more time than bilateral talks.

Even if all relevant countries were involved in negotiations, there is currently still no clear understanding about how to integrate these disparate projects, especially since the nature of both the EEU and the SREB remains somewhat abstract. The EEU is a structure with identifiable features, because it has a regulatory and legal framework, membership criteria and defined rules between members, while the SREB is still a rather philosophical vision, albeit with sufficient funds for its implementation, rather than a fixed organization. The SREB cannot be regarded as a single project and is aimed at integrating smaller ventures, programs, and initiatives across the world. It seeks to complement national economic projects, such as Kazakhstan’s Nurly Zhol and Mongolia’s Steppe Silk Road, and even subnational projects such as the Heilongjiang province Silk Road. These are separate projects, but without a strong infrastructure development impulse from Beijing’s Silk Road initiative, they have little practical meaning.

Adding to this, the exact implementation plan of the SREB in relation to all EEU countries is not clear. Although China has highlighted Central Asia as a focus of the SREB, plans to integrate Belarus, Armenia and even Russia itself into the project is less clear. Therefore, it is difficult to see how the SREB and EEU would tangibly collaborate. Currently there is no agreement or even comprehension of how to implement joint EEU/SREB projects on the territories of EEU states Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia.

The institutional framework developed for the EEU (i.e. free movement of funds, goods, service, and labour force), means that the implementation of these “rules” on the territories of non-EEU states that fall within the confines of the SREB (such as Uzbekistan, Mongolia, Turkmenistan, Tajikistan, etc) is currently impossible due to a variety of reasons.

Real economic integration is impossible without the liberalisation of visa and custom regulations. This is difficult to envisage given that the two key partners in the integration of the EEU and the SREB, Russia and China, have mountains of red tape preventing cross border travel and trade across the Sino-Russian border. There are numerous custom forms, protective legislation, and migration barriers on the path of the free movement of goods, services, and labor. Russia is certainly not about to reduce these barriers for several reasons, including the state’s desire to maintain control for economic and security purposes, as well as xenophobic public sentiments.

From the perspective of Russia’s interest, we need to admit that, due to Russia’s economic and technological weakness as well as Chinese economic dominance, Russia cannot be a leading player in China’s SREB project. It seems that the vast majority of infrastructure projects within the SREB framework will be built by Chinese businesses and funded through Chinese investments. In specific instances these projects could even result in Chinese contractors choosing to bring their own equipment or engineering service-providers, thus demonstrating China’s unwillingness to make concessions in favour of Russia.

Due to the increasing imbalance in the economic capabilities of Russia and China, the currently proposed formula of Russian resources in exchange for Chinese investments could ultimately hurt relations between Moscow and Beijing and lead to the deterioration of a still fragile trust between the political elites who rule the two powers. In order to maintain and develop the delicate consensus and maintain the genuine bonhomie in the relations between Russia and China, both countries need to continue searching of new mechanisms for the elevation of both the economic and cultural spheres of the partnership. In order to avoid the error of becoming too reliant on one country as its only significant partner, Russia needs also to reset a constructive dialogue with the West and to enhance cooperation with other allies in the Asia Pacific region.

Ivan Zuenko is a Senior Lecturer at the Far Eastern Federal University in Vladivostok, Russia.

Facebooktwittergoogle_pluslinkedin

One comment

  1. Pingback: L’intégration eurasiatique en perspective – RussEurope

Post a comment

You may use the following HTML:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>