Russia dominates the trade within the Eurasia Economic Union (EEU). In 2018 trade with Russia accounted for 96.9% of all trade within the Eurasian Union; trade among the four smaller countries accounted for the remaining 3.1%.
In 2000, total trade turnover between the five countries that would one day form the EAEU was worth $14.1bn. Of this, turnover between Russia and the four other members stood at $13.9bn – meaning Russia accounted for 98.6% of trade within the future bloc.
The total value of trade within these countries rose steadily over the next decade or so, reaching a peak of $73.1bn in 2012. Then the 2014-16 regional slowdown (driven by the slump in global energy prices and Western sanctions on Russia after it annexed Crimea) led to a sharp decline in trade within the EAEU. In a way, the formation of the EAEU could be seen as Russia’s response to the economic slowdown and a way to guarantee a captive market for its exports.
Yet even with the creation of the EAEU in 2015, total trade turnover between member economies has not recovered to its 2012 peak.
Armenia is the only member to see the share of its trade with EAEU nations rise over the past two decades or so. In 2000, trade with the countries that would become the EAEU accounted for 15.6% of Armenia’s total foreign trade turnover; this rose to about 27% by 2018. Again, trade with Russia dominates: Of Armenia’s $2bn trade with the EAEU in 2018, trade with Russia accounted for about $1.92bn. By contrast, Armenia’s trade with Kyrgyzstan is negligible: on average, over the past decade turnover between the two countries has remained below a million dollars. One problem is their similarities: both countries largely export metal ores and labour. Another complicating factor is Armenia’s closed border with two of its neighbours, Turkey and Azerbaijan, which has stifled its economy for decades.
Belarus, on the other hand, is deeply plugged into the EAEU. Some 51% of Belarus’s total foreign trade is with other EAEU members (overwhelmingly Russia) – although this is actually lower than it was (60%) at the start of the millennium.
In fact, with the exception of Armenia, every other EAEU member is seeing the portion of its foreign trade with the bloc fall – meaning they are diversifying.
Around 35% of Kyrgyzstan’s trade is with EAEU members. Again, this is a fall since 2007, when it reached a peak of 57%.
Russia’s share, at 8% in 2018, is actually the lowest among EAEU members, and has fallen slightly, from around 10% in 2000. In other words, despite dominating trade within the EAEU, Russia is least dependent on the bloc for foreign trade.
With the way Russia dominates, the EAEU is not a traditional customs union. Flows of capital and labor from/to the smaller EAEU economies are mostly concentrated around Russia. It is only natural that the smaller countries would seek to target this much larger Russian market rather than expand trade with each other. And when it comes to the free movement of labor, for two countries, that is the big benefit of membership: migrants from Armenia and Kyrgyzstan send homebns of dollars from Russia each year. But from the perspective of trade, the EAEU is largely a channel for Russia’s bilateral relations with the other four parties.
This article first appeared in Eurasianet. Sam Bhutia is an economist specializing in the former Soviet Union.