EUG: A union to rival the EU is born to the east

January 8, 2015

Translation of “Putin is preparing for hard things – He is also counting on the Hungarians” (Durva dolgokra készül Putyin – A magyarokra is számít) appearing in napi.hu on January 7, 2015.

On January 1st, 2015 the post Soviet equivalent of the European Union came into being.  Founding members Russia, Belarus, and Kazakhstan have already admitted Armenia and will admit Kyrgyzstan in May.  Reportedly at an earlier conference the possibility of Hungary also joining was raised.

According to an official statement the union is to work on the basis of World Trade Organization norms and concepts, ensuring the free flow of products, services, capital and labor among the members.

The Eurasian Economic Committee (the equivalent of the EC) is to be seated in Moscow.  Proceedings are to be conducted in Russian.  The heads of state are to form the top organization, the Supreme Eurasian Economic Council.   A rotating EUG presidency is to be held in alphabetical order, with Belarus being the first.

Cooperation negotiations have already started with Vietnam, Israel, India, and the Association of South-East Asian countries (ASEAN), as well as the South American common market MERCOSUR.   So fair the parties have reportedly managed to agree on the free flow of labor.  They are planning to introduce a common market for pharmaceuticals by 2016, electricity by 2019, and oil and gas by 2025.

According to information leaked by Izvestia (the former paper of record for the Soviet Union), plans are afoot to ban dollar and euro denominated transactions within the union within the next ten to fifteen years – a tall order considering over half the transactions taking place within the member states are in one currency or the other.

The next step would be the creation of a common currency, although there can be no doubt that that can only be the ruble.  However, the current crisis calls this into question.  The Kazakh president has already opposed the introduction of a common currency, and Belarus president announced that due to the crisis his country is only willing to conclude deals with the Russians in dollars or euros.

In response to the Western embargo, both Belarus and Kazakhstan have availed themselves of the opportunity to reexport food imports as their own products to Russia.  Furthermore, Kazakhstan has started exporting coal to Ukraine after Moscow suddenly stopped without offering any explanation.

Although Vladimir Putin strongly objects when western experts claim he is trying to create a modernized version of the Soviet Union, one shouldn’t forget that the former member of the Soviet Union are already linked by numerous military cooperation agreements, and that Soviet troops and supply basis exist in the EGU countries.  So the union is not only about economics.

The three founding members of EGU have already concluded a customs union for a total of 173 million consumers.  They own 20 percent and 15 percent of the world’s gas and oil storage facilities, respectively, and their collective financial system amounts to some 3000 billion dollars.  Their collective territory is 20 million square kilometers, or 15 percent of the Earth’s surface.