Putin's 'Eurasian Union' All About Gas

By Alina Inayeh

In an article published on Tuesday in the Russian newspaper Izvestia, Russia's prime minister and presidential hopeful Vladimir Putin announced his major foreign policy goal: the creation of a "Eurasian Union." This Union, he announced, would gradually encompass the countries of the former Soviet Union, but also stay open for other countries to join. Built on common values and converging economic and political interests, the Union would be "a new pole in the modern world" and together with "the European Union, the United States, China, and the Asia Pacific Economic Community, it should ensure the stability of global development."

Prime Minister Putin has repeatedly expressed his regrets for the departure of the Soviet Union, so this latest plan should not have surprised anyone. It is meant to project an image of power, assertiveness, and strategic vision mainly for a domestic audience, and it is very likely only the first in a future series aimed to divert public attention away from the real problem: Russia's increasingly dire domestic situation. Yet it deserves attention, as it reveals a serious concern with Russia's decreasing influence in its near abroad, as well as a lack of viable and attractive offers from Russia for the countries in the region.

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Russia has been trying to create a Customs Union within the former Soviet space for over ten years. This Union currently includes only Russia, Belarus, and Kazakhstan. All the other former Soviet states have declined to join it, either openly or by procrastinating over negotiations. The most notable example is Ukraine, which made its position clear by choosing a free trade agreement with the European Union over the Customs Union, despite Russia's attempts to prevent this. Two other countries in the region, Moldova and Georgia, are now in the course of negotiating free trade agreements with the European Union, with Armenia and Azerbaijan following. Despite the fact that they have been developed and implemented at an exasperatingly cautious pace, the European Union's economic and political ties with the countries in Russia's neighborhood now have firm roots, and these countries are gradually growing closer to European goods and labor markets, adjusting their internal legislation in the process. Even in its current economic crisis and general absent minded-ness, the European Union is seen as a better economic, not to mention political, partner than Russia, and thus remains a more attractive choice.

So it is precisely in reaction to the European Union's increased reach in the region that Putin would like to offer countries in Russia's neighborhood an alternative Union to aspire to. Yet it is also a counter-move to an even more pressing problem that Russia sees looming on the horizon. On September 9, Azerbaijan's President Ilham Aliev announced the discovery of a (yet another) gas field in the country, at Absheron. The field has an estimated reserve of 350 billion cubic meters and 45 million tones of condensed gas. Its exploration will bring Azerbaijan's annual gas output to 30 billion cubic meters, which happens to be the amount Europe needs to flow yearly through its Nabucco pipeline, meant to bring non-Russian gas to European countries. The new gas field thus makes Nabucco an economic reality, and it completely changes the energy equation in the region: Nabucco is meant to decrease Europe's dependence on Russian gas from 70 to 35 percent.

To add to Russia's worries, on September 7, the European Commission approved a long overdue communication on EU energy relations with third countries. While this is still a minor step, it is the first time that the Commission has put forward a call for a common energy strategy and asked member countries to exchange information about international energy agreements with third countries. With Nabucco closer to becoming a reality, aiming for coherence among the national energy strategies of EU member countries becomes a more achievable goal - or at least stops being merely a utopia. Add to this Russia's failure to fully control Ukrainian transit pipelines and the picture of Russia's worries becomes very sharp indeed. As things are developing now, Russia's gas exports to Europe would decrease substantially, and so would its leverage over European countries. A worrying prospect, and a difficult message in times of elections indeed.

A Eurasian Union would give Russia more clout, so it comes as a natural solution. Unfortunately for prime minister and presidential candidate, Vladimir Putin, it is a solution that comes both too late and too soon. Too late to curtail Europe's increasing reach in the neighborhood that it shares with Russia, and too soon to be led by a Russia that now needs time to fix both its economy and all its other internal problems.

Alina Inayeh directs the Black Sea Trust at the German Marshall Fund's Bucharest Office.

 

Copyright © 2011, The German Marshall Fund of the United States

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