A More Imperfect Union

July 30, 2013
Photo: Heritage

Luke Rodeheffer is an MA candidate in International History and a research assistant at Koç University in Istanbul, as well as a freelance analyst on Eurasian geopolitical affairs. He tweets on Eurasian geopolitics at twitter.com/lukerodeheffer.

Supporters of the Customs Union, which was introduced in 2012 to establish an economic compact between and among Russia, Ukraine, and Kazakhstan, awoke in June to a rather nasty surprise: the Russian Central Bank announced that the Customs Union was not only promoting greater trade between Russia and its two former Soviet neighbors, but was also making it vastly easier to illegally move capital out of the Russian Federation. Over half of illegal capital flight from Russia, equivalent to $25 billion, left via Belarus and Kazakhstan in 2012, as criminals made use of the lax new regulations for customs control on transfer of funds between the three countries. The problem of illegal capital flight is only one of several problems that pose serious challenges to the future of the Customs Union and its planned successor, the Eurasian Economic Union.

The political turbulence that Vladimir Putin faces domestically as his third presidential term continues has drawn a lot of international press coverage, but the Kremlin continues doggedly to pursue Putin’s main foreign policy goal: the creation of the Eurasian Union, a supra-national entity modeled on the European Union and designed to dissuade member states from joining the EU. The Eurasian Union will allow a “free flow of capital, services, and labor,” according to an editorial in Izvestia written by Putin during the last Russian presidential campaign. The Customs Union’s Common Economic Space came into effect across the three former Soviet states in January 2012, and the Eurasian Union will come into being in January 2015.

One of the main selling points for the Eurasian Union is the creation of a common labor market, part of a project that Putin promised in Izvestia will allow greater freedom of movement between member states than even existed in the Soviet Union. This labor market has been a chief draw for Kyrgyzstan and Tajikistan, both of which are heavily dependent on remittances from their citizens employed as gastarbeitery (guest workers) in Russia (According to the Federal Immigration Service, Russia’s shrinking labor pool needs to naturalize 300,000 new workers per year in order to maintain economic growth).

Yet it is difficult to see how the Eurasian Union would lead to the flow of workers in the other direction. Why would Russians and Belarusians want to work in Central Asia, where they have faced an increasingly hostile environment amid rising nationalist sentiment over the past two decades? Even Slavs in Kazakhstan, which make up around a quarter of the country’s population, are leaving or planning to emigrate in ever-greater numbers as Kazakhstan pursues a policy of promoting Kazakh nationalism. Over the past year, the number of Russians in Kazakhstan who indicated that they wanted to leave for Russia increased by a factor of two. Demography aside, what would drive a Russian to work in Kyrgyzstan or Tajikistan, both of which have a GDP per capita that is a mere fraction of that found in the Russian Federation?

The planned implementation of a common labor market across the Eurasian Union’s member space comes at a time when anti-immigrant sentiments in Russia are reaching all-time highs. A recently published survey by the All-Russian Public Opinion Research Center found that Russians rank the influx of “other ethnicities” into Russia as the main threat to national security, higher even than terrorism. This poll is only the latest evidence of rising xenophobia and ethnic nationalist sentiment across Russia, which has been reflected in polls and petitions for a referendum on the introduction of a far more restrictive visa regime for Central Asian guest workers to reduce their numbers.

This xenophobia has also increasingly manifested itself in verbal and physical attacks against guest workers from Central Asia. The latest attack occurred on July 2, as group of masked young men armed with pistols and tear gas raided a dormitory in Moscow housing guest workers from Central Asia, claimed that they were staying in Russia illegally, and forced them out of the building. Even mainstream politicians are capitalizing on the anti-guest worker sentiment, most prominently in the current Moscow mayoral campaign. In May, Sergei Sobyanin, the Mayor of Moscow, played on the discontent with the capital city’s massive guest worker population by stating in an interview that “Moscow is a Russian city and it should remain that way. It is not Chinese, Tajik or Uzbek. People who speak Russian badly and who have a different culture are better off living in their own country.”The situation for guest workers has become dangerous enough that the Tajik Embassy in Russia announced the creation of a support group aimed at protecting its citizens when entering and leaving the Russian Federation. Opposition candidate for mayor Alexey Navalny has similarly come under fire by various liberal opponents of the Kremlin for his nationalism and for an anti-migrant worker platform.

Putin has attempted to play the middleman by promising in his 2012 presidential address to end the long-standing tradition of allowing the inhabitants of former Soviet states to enter Russia with domestic passports, while still allowing this right for the citizens of Eurasian Union member states. Unfortunately, the Eurasian Union will lead to an almost exclusive one-way inflow of even more gastarbeiters into Russia than the approximately 10 million guest workers employed there currently, over half of who whom work illegally.

Kyrgyzstan and Tajikistan’s potential membership in the Eurasian Union poses other problems, too. If Russia seriously wants to allow these countries to enter the Eurasian Union, the question of how to secure the border zones of the two countries must be addressed. The Kyrgyz Vice Premier Mamytov recently admitted at a meeting concerning recent border disputes with Uzbekistan that Bishkek lacks the funds to sufficiently secure its borderlands. The customs officers who are stationed along the border are notoriously corrupt, and hundreds of millions of dollars worth of goods are smuggled across Kyrgyzstan’s borders annually.

The situation with Tajikistan is even worse, where the porous borders with Afghanistan are a primary transit point for heroin trafficking, a business that constitutes a major portion of the Tajik GDP. The Afghan border will become an even bigger challenge for the former Soviet space as NATO troops begin their withdrawal in 2014, giving even freer rein to poppy cultivation and leaving the borders even less secure. The Kremlin would do well to remember that the North American Free Trade Agreement (NAFTA) played a major role in the increase in narcotics trafficking and growth in crime networks along the U.S.-Mexican border, particularly since over 20% of the heroin coming from Afghanistan is already ending up in Russia, killing an estimated 30,000 Russians per year. If Moscow does not want the Eurasian trade space to be flooded by counterfeit goods and narcotics, it will need to take a major role in securing the borders of these two impoverished states.

The Customs Union and planned Eurasian Union are rife with long-term problems which have thus far been ignored in favor of fashioning this proposed economic project as a nakedly political one aimed at maintaining Russian hegemony in the former Soviet sphere. But the creation of both the Customs Union and the Eurasian Union are political decisions made by the leaders of post-Soviet states without popular approval. With Kazakhstan’s aging Nursultan Nazarbayev in poor health and his opposition calling for a referendum on leaving the Customs Union, Central Asia’s stability in question as NATO begins troop withdrawal, and with Russia rapidly spinning out of Putin’s control, it is perhaps worth asking whether the Customs Union or Eurasian Union is truly a serious enough project to survive the sudden shifts and power transitions that will occur in the post-Soviet sphere.