The Bear Hug: Russia’s Regional Ambitions

The author explores the ambitions of Russia in the context of its Eurasian Union idea. 


By Richard Wallace, 28th February, 2014

Over the past few months, mass protests have erupted in Kiev, Ukraine in defiance of (now deposed) President Viktor Yanukovich’s 11th hour U-Turn on the signing of an EU Association Agreement that would have been the first major stepping stone to full EU accession. The protests had morphed into a vociferous backlash against the corruption of the ruling elite and its increasing repressive domestic policies. Much of this anger has been directed across the border, to Ukraine’s (not so) brotherly neighbour, Russia. Critics see the hand of Putin behind this policy reversal, a frosty hand that has been slowly but surely tightening its grip around Ukraine’s throat over the last decade in response to its warming towards the West. Yet Ukraine is merely one amongst many states in the region to be embraced by the broadly encompassing and expansionist Russian bear hug, which can in recent years be summed up in 2 dirty words on the streets of Kiev: the Customs Union.

A proposed liberalised economic zone and a pet project of Vladimir Putin, it is set to evolve at a later date into a fully-fledged Eurasian Union, a political bloc modelled on the European Union. Its current member states include Russia, Kazakhstan, Belarus, and in the near future, Armenia and Kyrgyzstan. Populous and geographically sizable Ukraine, the former “breadbasket of the Soviet Union” with strong historical linkages to Russia, is a crucial piece in the puzzle. However, it has not formally joined, and the intellectual debate over whether it should or not has transformed into a widely publicised battle now manifested in the form of domestic unrest and violet upheaval on the street.

Its critics in Eastern Europe and Central Asia see the fledgling Union as a poorly disguised resurrection of the Soviet Union institutional framework that brought much of Eastern Europe and Central Asia firmly into the Russian sphere of influence until its disintegration in 1991. The political ethnography of Ukraine is divided into a broadly European-admiring West, and a Russian-feeling East. Should such a Union emerge, it would fundamentally and vastly alter the balance of power in the region as well as unleash unpredictable political dynamics and tensions in Ukraine that could lead to partition. Global spectators are presently gaining a glimpse of these tensions at work.

Optimists argue it is simply a logical step to enhance trade and intensify economic co-operation amongst states who share a high degree of cultural and ethnic affinity as well as pre-existing thriving trade relations. A Russian policy wonk would argue: “The West has a highly integrated block in the EU and to a lesser extent in NATO, so why can’t we?”

However one looks as it, what is clear is that the whole project has triggered a politically charged debate and divided electorates, making regime stalwarts in the region nervous and think twice. So just how feasible and credible is the notion of a Eurasian Union? And what does this reveal about the strengths and limitations of Russian power in its backyard?

Good Cop, Bad Cop

One argument goes that if Russia invests enough political and economic capital in the project, it will just happen. Why? Russia has an enormous arsenal of economic weaponry in the form of incentives and sanction-regime mechanisms: a carrot and a stick.

As a reward for dumping the EU, Russia had lifted a ban on Ukraine’s top chocolate maker, Roshen, which was imposed last July on health grounds, had granted Ukraine a discount on gas prices, and more significantly pledged $15 billion in aid as part of a bailout package to boost its ailing economy and pay off its gas bills that it owes to Russia. The hope is that this would have taken the steam out of the protest movement, which has consolidated its grip on the Maidan in Kiev, but which has also braved a long and cold winter. As if to gently remind Yanukovich of where his loyalties lie when his knees appeared to be buckling, Russia tightened border checks on Ukrainian imports. Despite having to force his Prime Minister to resign, taking a “medical trip” abroad, being pressured into releasing political activists detained over the past few months, and then ultimately drawn into lethal confrontation with protesters, Yanukovich and his pro-Russian policy until a few days ago, stood resolute. Only until his dethroning was the Russian grip loosened, revealing the depths of Russian influence in the domestic political scene.

In Central Asia, a region formerly under the Soviet orbit until 1991 and strategically vital to Russia’s energy security, Russia has also not been shy of pursuing a similar Janus-faced strategy of sweeteners and hard geo-strategic diplomacy to further entrench its traditional sphere of influence there. With Kazakhstan’s Nazarbaev (an architect of the union) more than amenable to the idea of a fuller union as a current signatory to the Customs Union, and with protectionist Uzbekistan and Turkmenistan staunchly opposing any such moves, Putin has focused his attention on Kyrgyzstan and Tajikistan. Both are relatively resource-poor by regional standards and are highly dependent on remittances from nationals working in Russia. Tajikistan imports about 95 percent of its oil and gas from Russia, and the country does not have as yet the luxury of alternative sources of supply. Russia’s state-owned behemoth, Gazprom, controls the pipelines and could theoretically turn off the tap at its leisure, as it has in the past in response to the recalcitrant behaviour of Poland and Ukraine. Putin has threatened to curb migrant work-rights should President Emomali Rahmon’s regime prove resistant to Russian overtures, a tactic evidenced when put to use against Armenia, which is now unsurprisingly joining the Customs Union. Russia last year secured a lease extension for its military base in Tajikistan, in which Russia’s 201st battalion will be able to operate rent-free until long after Putin is dead. In return, Russia has implemented its part of the bargain by granting privileges to Tajik labour migrants and has abolished duties on oil products.

Gazprom enjoys near total control over the gas supply in neighbouring Kyrgyzstan since its takeover of the pipeline infrastructure in July, and has succeeded in muscling out the US from the Manas airbase (a vital launch pad for military logistical operations into Afghanistan) which is due to close later this year. Negotiations are under way to woo the landlocked and energy-dependent country into the Customs Union. Analysts note that Kyrgyzstan has little alternative. Unlike Ukraine, it cannot negotiate on favourable terms if there is no alternative club to join on its doorstep, and it is beholden to prevailing political winds in the region.

Big Fish, Little Pond

Yet it would be wrong to contend that Russia’s influence in the region is unchallenged. In recent years, China has staked its claim as a key partner for Central Asian states, investing heavily in infrastructure, and ratifying significant trade deals in Kazakhstan at the end of last year. As if to underline the strategic importance of the region for resource-hungry and oil-thirsty China, President Xi Xingping embarked upon a state visit to Kazakhstan, carrying in his briefcase loans on generous terms.

Unlike the rather somber looking Putin, the smiling Xingping has striven to continue China’s longstanding policy of soft diplomacy, resisting the urge to pressure Central Asian states into accepting restrictive trade policies or seeking to penetrate their domestic political spheres. For Russia, Central Asia is primarily an arena for the Great Game, where it can project its military and political power and exhibit to the world its sense of a re-emerging Great Power status that it possessed in yesteryear. The ongoing Winter Games in Sochi are a fine example of Russian vanity in this respect. For China, its interest are purely economic and pragmatic, and the sense of distrust felt by many regional leaders towards Russia is largely absent in dealings with China. It is thus rapidly becoming a favoured partner in the region, a trend which is likely to strategically undercut Russian influence in the future.

Even Russia’s main weapon of diplomacy in the region, its pipelines, looks likely to become dulled in the wake of Chinese funding of the construction of an alternative pipeline system across Turkmenistan, Uzbekistan and Kazakhstan that would supply China’s energy needs. It has also funded the construction of the second-largest gas field in production in the world, Galkynysh, and China’s National Petroleum Company (CNPC) has purchased an 8.33% stake of the leviathan Kashagan oil field. Central Asian states look set to achieve their long-term goal of energy market diversification at the expense of Russia. Once guarded and borderline Sinophobic, Central Asian states now welcome Chinese investment with open arms. Even grizzly Uzbekistan has sniffed the opportunism in the air- China is now Uzbekistan’s second largest trading partner and primary investor in its transportation sector. With new opportunities for multi-vector diplomacy between China and Russia, it is not unreasonable to assume that the political imperative for “ever-closer union” with Russia (as seen in the EU) is passing by.

Indeed, Central Asian states may eventually look to China as the driving force behind enhanced economic co-operation within the broader framework of the Shanghai Co-operation Organisation (SCO), of which both Russia and China are members. Established as a forum to discuss common security concerns and promote deeper trade connections, there is potential for the SCO to evolve into a rival project to the Eurasian Union at the behest of Central Asian states seeking to dilute and counter-balance Russian influence and dominance in the region.

A Crowded Room

It is perhaps ironic that Russia has sown the seeds of its own downfall in terms of its regional ambitions. The strongest legacy of the post-Soviet era in Central Asia was the emergence of strongman regimes built around individual cults of personality. The Presidents of the newly independent republics were drawn from a cadre of Soviet-era functionaries, used to operating in a top-down, highly centralised power structure. Consequently, new but recognisable power vertical within super-presidential systems emerged, similar to that in Putin’s Russia. One might argue, given the commonalities in leadership styles and the shared goal of preserving the autocratic regime apparatus’ in the face of Western pressure to democratize, that there would be momentum for the republics to seek to gel together into a protective political formation in a Eurasian Union. Not necessarily so.

Authoritarian states do not like to share power. The failure of Arab states to realise the dreams of self-proclaimed Arab Nationalists such Gamal Nasser is proof of the obstacles such supranational endeavours can face. Autocrats guard their fiefdoms jealously, and indeed much of their engineered popular legitimacy rests on their role as the protector of nation’s sovereignty against perceived external threats and neighbourhood bullies. For his reason, Uzbek President Karimov has repeatedly rejected invitations to join Putin’s project, fearing Russian domination of such a union. Turkmen President Berdimuhamedov, like his late predecessor, Niyazov, has pursued a strictly non-aligned foreign policy, and has the latitude to do so given Turkmenistan’s substantial gas reserves in the Caspian. Even Kazakhstan’s Nazarbaev, on paper a staunch supporter of union, would likely breathe a sigh of relief should the Eurasian project be stillborn after spending decades crafting a nationalism infused with his personality cult as Father of the Nation. In the spirit of realism, Central Asian states are loathe to relinquish their ability to conduct multi-vector diplomacy, playing off neighbouring powers against each other to extract the best possible concessions for their respective national interests. Within a political union, their freedom to do so would be severely curtailed under the watchful gaze of Moscow.

A Looming Economic Hangover?

In Kyrgyzstan, economic nationalism has reared its head in recent years in the high profile dispute between Kyrgyz politicians and the Canadian mining corporation, Centerra, over control of the Kumtor gold mine. Kyrgyz parliamentary lawmakers are determined to re-write he terms of the revenue-sharing agreement in place, in which the lion’s share goes to Centerra and not into the state coffers and onto the people, as populists are demanding. In such a sensitive political climate, widespread uneasiness towards political union in which further sovereignty would have to be given up is understandable.

There are also genuine fears that the Customs Union itself will damage economic life in Kyrgyzstan, which has an import-heavy economy. Its leaders have already signalled that they are putting the brakes on, deliberately dragging out the process. President Atambaev recently informed journalists that even accession in 2015 was optimistic. Negotiations with the present member states (i.e. Russia) are still ongoing, with Kyrgyz delegates pushing for the right to retain low tariffs (of the kind set by the WTO of which it is already a member) on a swathe of imported goods, primarily from China next door which of course would be outside the planned free trade zone. Kyrgyzstan has a strong “transit economy”, in which imported goods from China are then sold onto wholesalers in Kazakhstan and Russia, due to the low tariffs. Thus, for the ordinary Kyrgyz citizen, entry into a Customs Union seems synonymous with price hikes and larger holes in their pockets. Agriculturalists express concern that duty-free exports of Russian and Kazakh agricultural products into Kyrgyzstan will be unbearably competitive and will swamp Kyrgyz markets, making economic activity in that area unfeasible.

Yet, there is a sense that you are damned if you do, and you are damned if you don’t. Russia and Kazakhstan could easily raise the stakes and charge higher tariffs anyway as a punitive measure if Kyrgyzstan does not join. A third of its imports come from Russia alone, with some essential goods imported entirely from Customs Union states, including oil products and wood. Analyst therefore argue that there is no real choice at all, and it is simply a matter of time before Kyrgyzstan succumbs to Russia’s gravitational pull.

The People Want

Politics is unpredictable however. Uniquely for the region, Kyrgyz protestors have already kicked out two of its leaders, former Presidents Akaev and Bakiyev in the last decade. The people have tasted blood and victory, and it wouldn’t take much to push them back onto the streets and squares of Bishkek en-masse if socio-economic indicators start to shift downwards after accession. Kyrgyz proudly describe their nation as an “Island of democracy” in a region of stifling political repression- and they would surely vehemently guard their democratic culture from any political interference in a full Union.

Russian belligerence has proven to be counter-productive in the past. In the brief 2008 Russia-Georgia war, Russian forces threateningly progressed to a stone’s throw away from Tbilisi before withdrawing, taking the breakaway regions of Abkhazia and South Ossetia with it, unilaterally recognising them as independent territories. In the long-term, Russia hopes to defrost relations with Georgia, though relations presently seem irreparable. Georgia is pushing hard and fast for EU accession within the framework of the Eastern Partnership Programme, as well as for membership of the collective-security alliance, NATO, to protect it from its larger neighbour, and this is in no small part due to Russia’s aggressive ventures.

Developments in Ukraine over the past few days and weeks is evidence of the spontaneity and power of nationalist street protest, and the resilience of anti-Russian sentiment. A long-time Putin ally in Victor Yanukovich has been removed from access to power in the face of overwhelming public pressure. Ukraine’s future and its relationship with Russia is uncertain and has been thrown into disarray. As the tires and barricades burnt on the streets, so did Russia’s dreams of Ukrainian accession into the Customs Union in the foreseeable future. Putin himself fears the contagion the revolution has generated, and there is every possibility that the protests that were snuffed out in 2012 in the wake of his fraudulent re-election will re-ignite in Moscow, distracting him from his pet project.

As it stands, the future of the idea of a Eurasian Union looks bleak. Perhaps Russia will recover and its Customs Union will survive in a diminished form less Ukraine. It is also premature and naïve to assume that Russia will have no role or influence in post-revolutionary Ukraine. Putin will strive to make life hard for any new Western leaning administration that may emerge, and short of an equivalent massive bailout from generous Western governments, will still control Ukraine’s debt and purse-strings. Moreover, its leverage in Central Asia, whilst not unchallenged, remains intact, though serious obstacles remain in place which make political union unlikely. It is too early to write off Russia, and though the bear is wounded, its attention fixated on licking its wounds, it is not down entirely.


Richard Wallace is a London-based writer on Middle East and Central Asian politics and security, with a particular interest in Yemen. He is a graduate of the School of Oriental and African Studies (SOAS), holding a Masters in Middle East Politics. He can be reached by email at: wallace.rich86@gmail.com. He is also on Twitter @RichieJWallace.

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