The Geopolitics of the Eurasian Economic Union

from The deal signed last week by Russia, Belarus, and Kazakhstan to create a Eurasian Economic Union is
yet another countermeasure against US and European attempts to isolate
By moving towards closer economic cooperation, Russia hopes to
build, piecemeal if necessary, a common Eurasian economic space that
will ultimately rival the US and Europe in terms of economic influence.

However, the ultimate goal of this sort of cooperation goes far
beyond just economic power. Rather, Russia is the key facilitator of a
series of multilateral arrangements created in the last fifteen years
that Putin (and much of the world) hopes will ultimately move the world
towards a multipolar global order. While this is undoubtedly on the
agenda for Russia and its ally Belarus, Kazakhstan is a complicated
partner as it is deeply involved with the West in terms of business,
investment, education, and a number of other critical areas.

The Eurasian Economic Union (EEU) presents a host of possibilities
for economic cooperation and development. From energy reserves to the
all important pipeline infrastructure, the new arrangement will, over
time, have a greater and greater impact on energy exports and
consumption both in Europe and Asia as China looks to further secure its
energy future. Moreover, the EEU will impact vital trade routes and
commercial and private transportation options, in addition to promoting
political, military, and security cooperation among the members, and in
the region generally. Essentially then, the EEU should be understood as
yet another blow to US hegemony in Asia and the former Soviet space.

Regional Economic Impact

The establishment of the EEU will undoubtedly have a significant
regional impact, and quite possibly a global one. As the economic ties
between Russia and China continue to develop, as evidenced by the
recent massive energy deal signed by the two countries, the impact of this agreement grows in importance.

Both Russia and Kazakhstan will be significant energy suppliers to
China, the world’s leading consumer of energy. In fact, earlier this
year the Chinese government announced that
oil imports via the China-Kazakhstan oil pipeline reached record highs
in 2013, having increased 14 percent from 2012. In addition, the recent
Russian-Chinese gas deal creates the prospect of still greater pipeline
connections that will cement Russia’s place within China’s strategic and
economic future. Not only is there likely to be a new pipeline
connecting Russia’s Far East with China’s northeast region, but initial
preparations are already being made for the construction of the Altai Pipeline, which will bring Russia’s gas to China’s Xinjiang province in the western portion of the country.

Essentially then, the geography of the deal is such that Russia and
China will be physically linked both from east and west, creating a
symbiotic relationship within which other forms of cooperation will
flourish. Of course, Kazakhstan could have a major role to play in this
scenario being that it is conveniently situated across the border from
Russia’s Altai region. However, considering Kazakhstan’s status as a net
energy exporter, it seems unlikely that Russia would be interested in
promoting the energy development of a potential rival in the Chinese
market. That being said, Kazakhstan has the potential to greatly benefit
from China’s rekindling of the New Silk Road project.

Chinese news agency Xinhua recently published a
revealing look into Beijing’s vision for the New Silk Road project. The
authors noted that the project will bring “new opportunities and a new
future to China and every country along the road that is seeking to
develop,” with the ultimate goal being an “economic cooperation area.”

While this bold and far-reaching plan still requires massive preparatory
work, the establishment of the EEU will only help the project.
Beijing’s vision of the New Silk Road being a space for “more capital
convergence and currency integration” fits nicely with the attempt to
use the newly founded EEU to move towards regional economic integration
in Central Asia. With Kazakhstan being a central part of both the New
Silk Road and EEU, it seems likely that each will benefit from the
development of the other.

Of particular significance is the fact that Russia and China recently signed a deal to bypass the US dollar in
bilateral debt settlements and payments.
The “Agreement on Cooperation”
signed between Russia’s VTB and the Bank of China is the opening salvo
in a burgeoning currency cooperation relationship between the two
countries which will ultimately lead to increased economic and financial
independence from the West. With the establishment of the EEU, the
ruble is quickly becoming a critical currency in Central Asia, while the
yuan continues to grow in its regional and global importance. In
particular, Beijing envisions the yuan as becoming a dominant currency
all along the New Silk Road.

With the convergence of these two multilateral arrangements,
cooperation on currency issues becomes of central importance. Naturally,
this should be understood as a significant blow to dollar dominance
and, consequently, US hegemony throughout the Eurasian land mass.

An additional area of cooperation that takes on geopolitical
significance is that of space exploration. Specifically, the Russian
space program has long been using the Baikonur space center in
Kazakhstan as its space launch hub. In 2013, negotiations between the
countries established a three year roadmap on
the cooperative use of the facility. With the Chinese becoming
increasingly ambitious in terms of their space program, and the recent decision by NASA to
end cooperation with Roscosmos, the Russian space agency, it would seem
a natural fit for Russia and China to move towards more cooperation,
while Russia and Kazakhstan continue as partners. With the EEU and Silk
Road providing the framework, a new strategic alignment emerges in the
area of space exploration. 

Naturally, the US, dependent as it is on
Russia for travel to space, comes out the loser in the scenario.

Not to be forgotten in the context of the EEU is Belarus, a former
Soviet Republic and longtime close ally of Russia. Although Belarus is
in some ways the forgotten player in this geopolitical calculus, the
country actually holds a tremendous amount of strategic importance for
Russia. Perhaps most principally, Belarus represents a crucial link in
Russia’s energy supply network to Europe. The Yamal-Europe pipeline,
which transports roughly 20 percent of Russia’s European gas exports,
was purchased by Gazprom in 2011.
Seen as a means diversifying its European energy delivery
infrastructure away from total reliance on Ukrainian pipelines, the move
has physically linked Russia and Belarus which, from the Belarusian
perspective, makes Russia its principal market and strategic ally.

Additionally, Belarus is a major exporter of heavy machinery,
particularly dump trucks, tractors, and other machines critical for
industrial manufacturing and construction. With Russia as its principal
customer, Belarus could stand to benefit greatly from increased economic
partnership within the EEU. Specifically, trade restrictions, currency
issues, debt settlement, and other significant obstacles could either be
eliminated or greatly reduced such that Minsk could stand to gain
tremendously from the new arrangement. Given its status as a pariah
within the EU economic space, Belarusian President Lukashenko likely
sees the EEU as a positive step towards both economic stability and
gaining leverage over Europe in terms of negotiations and sanctions.

The Kazakhstan Question

With the establishment of the EEU, Kazakhstan is poised to become an
even more important player on the world stage. Aside from its already
well known strategic energy reserves and mineral deposits, Kazakhstan’s
geography makes it a critical link for both China and Russia in Central
Asia. So, it would seem then that the country has a clear road to
economic prosperity, one paved by Russia and China. However, a closer
examination of the country’s geopolitical and financial alignment
reveals that, rather than a full-fledged, “no strings attached” economic
partner, Kazakhstan has positioned itself as both friend and possible

While it would seem that Kazakhstan would be a natural ally of Russia
and China, with a bright economic future in the context of Eurasian
development, the reality is that the Nazarbayev regime has deeply
intertwined itself with the West through various institutions and organs
of finance capital. Both the US Agency for International Development
(USAID) and US Chamber of Commerce are well-connected in the country,
with long-standing relationships with key figures in Kazakhstan’s
government. In fact, USAID facilitated the creation of the US-Kazakhstan Public-Private Economic Partnership Initiative (PPEPI). As the PPEPI’s report notes,

“The PPEPI Program was developed as a policy reform
initiative in order to promote ongoing dialogue between senior-level
government officials and leaders in the business community…PPEPI has
fostered discussion and provided recommendations on many of the key
challenges that Kazakhstan faces as it strengthens and diversifies its

A close examination of the PPEPI, along with the “pro-business” activities and membership of the American Chamber of Commerce in Kazakhstan,
illustrates quite clearly the fact that western finance capital is
deeply rooted in the country, with influence and connections extending
to the highest levels of the government. Perhaps nothing demonstrates
these concrete connections better than the recent appointment of Azamat Oinarov to
head the Kazakhstan Public-Private Partnership Center. As the former
Deputy Defense Minister for Economics and Finance, Oinarov represents
what could be regarded as the “revolving door” between Kazakhstan’s
government and the institutions and organs of western finance capital.
Serving as essentially a liaison between western business interests and
the Nazarbayev government, Oinarov is merely one of many bureaucrats
whose primary function is to maintain the presence and profitability of
western corporations in the country.

The influence of western finance capital in Kazakhstan does not stop
with the business community. In fact, one of the most critical aspects
of the US-Western presence in the country is the widely acclaimed
Nazarbayev University, established as a centerpiece in the new capital
of Astana. The university was conceived, designed, partially financed,
staffed, and launched under the guidance of a number of prominent US
universities, including Carnegie Mellon University, Cambridge
University, Harvard University (Kennedy School of Government), and many
others. However, it is the leadership and guidance provided by the World
Bank that truly made Nazarbayev University a reality.

As investigative reporter Steve Horn wrote for CounterPunch in late 2012:

“The World Bank in late-2007 proposed plans to upgrade
and “commercialize” [Kazakhstan’s] research and development efforts.
Part of the Bank’s blueprint called for the creation of a network of
university-housed, market-oriented research and development centers
based primarily on U.S. models. Subsequent World Bank proposals for
the revamping of the country’s technical and vocational
education followed suit…NU arose via a number of direct initiatives
closely coordinated by the World Bank, these days re-branded as the
‘‘Knowledge Bank” set on a mission to eliminate global poverty through
market-centric “education reform” efforts akin to those occurring in the

The role of the World Bank, along with some of the most prestigious
universities and powerful corporations in the western world, in
establishing and administering Nazarbayev University, is an obvious
indication of the tremendous influence these institutions wield inside
Kazakhstan. Moreover, the implications for the future of the country are
quite ominous indeed. As an entire generation receives their
“westernized” education from Nazarbayev University, the logical outcome
will be an entire generation of young leaders whose professional and
academic connections will all be rooted in western institutions. This
does not bode well for the notion of Kazakhstan as a reliable partner
for the EEU and China’s Silk Road.

How Will the West Respond?

Undoubtedly, Washington and its European allies see the establishment
of the EEU as a worrisome development. And so, the region and the world
should prepare for some sort of a counter-measure against this growing
independence. Specifically, the United States is likely to employ all
the weapons of soft power at its disposal to derail, or at least stymie,
the EEU and the Eurasian project generally.

One likely response will take the form of destabilization of China’s
western territory of Xinjiang.
Populated predominantly by the Uighur
people (Muslims belonging to the Turkic ethnic group), the region has
experienced intermittent violence for decades, with terrorism becoming
the principal destabilizing force in recent years. In particular, the
organization known as the East Turkestan Islamic Movement (ETIM) has
been responsible for dozens of acts of terror in the last two decades.
However, the terrorism is merely one critical part of the broader US
attempt to pry Xinjiang from the Chinese or, at the very least, make it
too volatile and dangerous to be developed economically as Beijing

Xinjiang figures prominently in Beijing’s development plans. First
and foremost, Xinjiang, with its regional capital of Urumqi, is an
all-important land bridge in the New Silk Road project. Linking China
with neighboring Kazakhstan and, ultimately, with Turkey, the region
takes on great importance as both a transit hub and point of origin for
Chinese exports to the West. Additionally, Xinjiang’s capital of Urumqi is the likely candidate for
the Chinese end of the Altai Pipeline discussed above. As an industrial
center geographically near to all of China’s partners and neighbors to
the West, Urumqi becomes a linchpin in the broader Chinese strategic

With the obvious importance of Xinjiang to China’s long-term plans,
the US presence in the region takes on added significance. In
particular, the US has a formidable “soft power” presence in the region
through its long-standing financial support of a number of anti-Chinese
NGOs and other organizations.
Specifically, the US has spent millions of
dollars in Xinjiang through its National Endowment for Democracy (NED),
supporting ostensibly “human rights” organizations and watchdogs such
as the International Uyghur Human Rights and Democracy Foundation, the
International Uyghur PEN Club, the Uyghur American Association, and the
World Uyghur Congress. 

Each of these organizations, dependent for their
existence on US funding, is fanatically anti-Chinese and agitate for
secession and “self-determination.” They have been at the epicenter of
all social unrest in the region, with a representative of the World
Uyghur Congress going so far as to justify the recent terror attack in
Kunming which killed 33 by saying that “[China’s] policies provoked ‘extreme measures’ in response.”

With Kazakhstan and China moving closer via the Shanghai Cooperation
Organization (SCO), and Kazakhstan now part of the EEU, it would seem
quite likely that a new outbreak of violence in Xinjiang might be just
what the imperial doctor ordered.
Moreover, one could easily imagine a
rapid proliferation of the ETIM threat in the region, as it receives
tacit political support from the US-funded Uighur organizations. Such a
move would effectively block any attempts to build pipelines, rail
links, and other critical infrastructure for the New Silk Road and
Russia-China pipelines.

On the other side of the border from Xinjiang sits Kazakhstan which,
like its neighbor, is deeply penetrated by organs of US soft power.
The NED funds a wide array of NGOs throughout
the country, including the infamous International Republican Institute
and National Democratic Institute, along with other organizations with
innocuous-sounding names like the Kazakhstan International Bureau of
Human Rights and Rule of Law. Because these organizations are deeply
entrenched in the country, the US is able to wield tremendous influence
within Kazakh civil society, making it a de facto weapon against the
government should the need arise. This is of course part of the
long-standing “soft power” strategy that the US has deftly employed all
over the world, from Latin America to Eastern Europe.

Renowned author and columnist Pepe Escobar recently published a landmark piece entitled “The Birth of a Eurasian Century?” in
which he examined the world-historical turning point that is the
Sino-Russian partnership which extends far beyond simply gas and
pipelines. Escobar wrote, “The now symbiotic China-Russia strategic
alliance – with the possibility of extending towards Iran –
is the fundamental fact on the ground in the young 21st century. It will
extrapolate across the BRICS, the Shanghai Cooperation Organization,
the Collective Security Treaty Organization and the Non-Aligned
This transformation, once thought of as a future trend, has
now become an inescapable geopolitical reality.
The establishment of the
Eurasian Economic Union is merely another manifestation of the new
global order. However, Russia and China, along with their allies and
partners, would do well to note that the West is not going to cede its
hegemonic position without a fight. What exactly that fight will look
like remains to be seen.

Eric Draitser is the founder of He is an independent geopolitical analyst based in New York City. You can reach him at

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