In his 2005 State of the Union Address President Putin spoke for many Russians when he called the collapse of the Soviet Union as “the biggest geopolitical catastrophe” of the 2oth century. Of course, the loss of empire has always been hard to bear for the imperially minded, whether in Austria, Germany, France, Turkey or the U.K., to mention just a few recent ex-empires other than Russia. But one does not have to be a “Eurasianist” ideologue or a far-right Russian nationalist to recognize that the disintegration of the Soviet economy was a key cause of the painful economic collapse in the CIS republics after 1991, far worse than the Great Depression of the 1930s in the West.
At the same time, there is too little recognition in Russia and elsewhere that the disintegration of the Soviet Union also started a dramatic new process of economic integration across the entire huge Eurasian super-continent. This process of integration—from Amsterdam to Beijing and from Vladivostok to the Bay of Bengal—has the potential of being the biggest global economic and geopolitical phenomenon of the 21st Century. For Russia it presents great opportunities and challenges. Rather than mourning the loss of empire, Russia—along with its Eurasian neighbors—needs to focus on how best to meet these opportunities and challenges.
Eurasia was in effect an integrated economic space during the first half of the last millennium, created by Chingis Khan and his heirs starting in the 12th Century and symbolized by the Great Silk Road. However, political disintegration of the Mongol Empire, the growing ease of sea-transport and the rise of colonial competition—later characterized by Kipling as the “Great Game”—caused the disintegration of Eurasia starting about the time that Christopher Columbus and his fellow explorers began a centuries-long process of transatlantic and later transpacific integration. More recently, the self-imposed economic isolation of the Soviet Union and of Communist China meant that large parts of Eurasia did not participate in the “globalization” of the world economy after the Second World War.
But as China opened up to the rest of the world in the 1980s and as the Soviet Union collapsed in the early 1990s political barriers fell away and strong forces of economic integration have now taken hold in Eurasia. Today we see integration proceed very rapidly across a wide spectrum of economic and human interaction.
The most obvious area is that of energy. We now have pipelines rapidly expanding across the entire super-continent, taking Russian and Caspian oil and gas to Europe and increasingly to East and South Asia. Central Asian hydro electricity may soon help meet Russian needs and those of Afghanistan, China, India and Pakistan. As a result Eurasian countries are also becoming increasingly intertwined in terms of ownership of energy assets, with Europe investing in Russia and vice versa, China and India in Kazakhstan, Russia and Iran in Tajikistan, to mention just a few. Of course, there are competing interests between and among energy suppliers and consumers, respectively, and so far the institutional and political infrastructure to manage this rapid process of energy sector integration remains poorly developed.
Non-energy trade and investment are also rapidly increasing across Eurasia, albeit from a low level. With WTO membership of Russia, Kazakhstan and Ukraine the economic integration of Eurasia will get a major boost. Major investments are underway or planned in improved transport infrastructure, not only between the European Union and its eastern neighbors, but also within Asia and between Asia, Central Asia and Russia. But much needs to be done beyond transport infrastructure. It is necessary to remove the barriers to transcontinental trade resulting from inefficient, confusing and corrupt border management, customs administration and internal transit conditions. The potential improvements in transport cost and times are huge: For Central Asia it has been estimated that the cost and time of truck transport to and from Europe could be halved by improved transit management. Russia could similarly benefit.
The process of economic integration is much aided by improvements in telecommunications and internet connectivity. All of Eurasia is now covered by the footprints of satellites and broad-band telecommunications access is spreading rapidly. Those countries that had least connectivity in the past are rapidly catching up. As a result, governments, businesses and people all over the super-continent have ready access to each other, lowering the cost of distance and facilitating trade and investment. Rapidly expanding air traffic also in effect shortens the distances, improves business communication and allows for rapid expansion in tourism. Today, Chinese tourists are the most rapidly growing tourism segment in Europe.
But people travel not only for business and pleasure. They are also on the move through Eurasia as part of a new migration wave. Where in the last two centuries, migration had been mostly a transoceanic phenomenon—from Europe and Asia to the Americas—it is now increasingly intra-Eurasian. Central Asia and Caucasians in Moscow, Chinese in Russia’s East, Turks and Arabs in Europe, Bangladeshis stranded in Ukraine on their way to Western Europe: these are just some examples. As the barriers to travel and communication across Eurasia are falling, migration is rising. This creates well-known opportunities and challenges, for recipient and source countries alike.
Eurasian integration also brings new and serious risks. These include the rapidly expanding transcontinental drug trade from Afghanistan and South-East Asia to Europe and increasingly to Russia and China, and the rapid spread of health epidemics, esp. HIV/AIDS and TB, but also SARS and Avian Flu. Finally, criminal and terrorist networks spread across borders more easily today than they did in the past.
With all of these forces of economic and social integration at work, what are Eurasians doing to meet the opportunities and risks? In short, they are doing much, but also much too little.
The EU is expanding its “neighborhood” approach haphazardly towards the East, while squabbling internally and slowing down its enlargement process for potential new members, especially Turkey, which could serve as a bridge to Asia and the Middle East. Europe apparently has not yet recognized that it in effect shares a continent with China and India. China, Japan and Korea have much intensified their mutual economic ties, but in the political arena often seem to be stuck in a mindset dominated by a difficult past. India and Pakistan have started to talk about Kashmir, but remain in hostile camps. This limits their ability to work together in the larger Eurasian integration process. Iran is a rising power that still has to establish its own sense of purpose and standing in the explosive Middle East, not to mention Eurasia and the world at large.
A revitalized Russia is reaching out in all directions, both economically and diplomatically. It not only works on strong bilateral relations with key neighbors, especially in the former CIS, it also has intensive ties with the EU and is building relations with China and Central Asia through the Shanghai Cooperation Organizations. But Russia’s motives and instruments are sometimes questioned and Russians themselves feel ambivalent about the rising tide of integration.
Among the neighbors in the CIS the fear is that Russia might stifle their own national aspirations by snapping up valuable national resources and assets, or by monopolizing access to international markets, while the neighbors undoubtedly benefit from the expanding trade, investment and migration opportunities which Russian revival offers. More distant neighbors in Europe, East Asia and South Asia see Russian energy resources as an opportunity, but also their dependence on Russian energy as a source of insecurity. In Russia Eurasian integration creates tensions and resentment: the inflow of consumer goods from abroad undermining local firms (especially from China), the wave of migrants from the East, a rising Islamic challenge from the South, and an encroachment from the West by the EU and NATO.
None of these tensions and frustrations should come as a surprise. Just as the process of globalization has created opportunities and challenges world-wide, so will the process of integration for Eurasians. The important task will be three-fold: first, to recognize that the Eurasian integration process is in fact happening; second, to realize that all Eurasian countries have a shared interest in creating the conditions for a stable and prosperous future of an integrated Eurasia; and third, to develop the necessary economic and political institutions to manage the process of integration as effectively as possible.
If there is a lesson to be learned from the history of Europe in the 19th and 2oth centuries, it is that economic integration alone does not result in peace and prosperity. Political cooperation and institutions need to be created to establish a sense of order, fairness and predictability among nations that can serve as an umbrella under which economic integration can proceed. As in Europe fifty years ago, now all major Eurasian powers need to recognize their interdependency and the urgency of cooperation. As in the European case, cooperation can start in key functional areas (e.g., energy and transport) and then expand to more general forms of institutional integration. But it undoubtedly also will require a vision and a willingness by the leaders of the key countries to get together regularly to build trust and set the key directions for partnership.
Russia, as a Eurasian country par excellence with its transcontinental location and expanse, as an energy giant, as a political and military heavy-weight and as a reviving economic power, can both benefit from a peaceful, prosperous Eurasian integration process and well as suffer from the risks of poorly managed integration. In partnership with the other Eurasian powers—the EU, China, India, Japan and Korea—Russia needs to assume a lead role in promoting the economic and political institutions which will make the Eurasian integration process a success. This requires a very clear cooperative perspective on the part of the Russian government, a willingness to abandon the memories and rhetoric of an imperial past, and a recognition that going it alone, against or without, rather than in partnership with its Eurasian neighbors, will not be in Russia’s long-term interest.
[On Russia, Saudi Arabia and oil prices] This is testing out what prices everyone can live with, and it sounds like the Russians can live with prices slightly lower than what the Saudis want to live with. How durable is this Russia-Saudi agreement? They made it under some serious duress after the price drops from 2014-16, and they didn't have much choice. Do their interests align over the long term? We may begin to see the answer as they begin to chat at the G20.
[On oil prices] The question is whether they want to get crosswise with the Saudis or not. It's not friendly cooperation, especially the Saudis and the Russians. This is definitely more a marriage of convenience than love.
Dollar-denominated oil survived three years of rock-bottom prices and diverging economic fortunes between the United States and the producing countries. It is unlikely to change now that the industry is more flush with cash.