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Ten years on, the Eurasian Economic Union remains a work in progress, its ambitions for integration tempered by geopolitical tensions and uneven economic realities.
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Established in 2015, the Eurasian Economic Union (EAEU) is the culmination of efforts undertaken to institutionalise economic regionalism in the post-Soviet space. Comprising Russia, Belarus, Armenia, Kyrgyzstan, and Kazakhstan, the Union is conceived as a supranational framework inspired by the European Union, designed to facilitate the free movement of goods, services, capital, and labour, and to promote coordinated economic policies across member states. Over the past decade, the EAEU has undergone a transformative evolution, not only enhancing economic linkages among member countries but also attracting interest from external partners, including states, regional organisations, and transnational institutions. Nevertheless, despite strong political commitment, the Union’s effectiveness continues to be constrained by persistent geopolitical frictions and structural disparities among its members. Against this backdrop, tracing the development of neo-regionalism in Eurasia and charting its future trajectory merit continued scrutiny.
The impetus for strengthening economic regionalism in Eurasia has largely stemmed from the need to strengthen intraregional economic linkages, modernise national economies, and foster an environment to improve global competitiveness. The earliest efforts in this direction emerged in 1995, with the conclusion of a customs union agreement between Kazakhstan, Russia, and Belarus. Five years later, an agreement was signed for the establishment of the Eurasian Economic Community (EurAsEC), which expanded to include Kyrgyzstan and Tajikistan alongside the original three members.
New Delhi believes that emerging niches in the Russian economy, created by sanctions and accompanied by the relaxations in non-tariff barriers, could be exploited by Indian manufacturers.
By the 2010s, regional economic integration deepened further with the introduction of unified customs tariffs and a harmonised commodity nomenclature among Russia, Kazakhstan, and Belarus. The culmination of these developments came in 2015, when Armenia and Kyrgyzstan joined the three founding states to form the EAEU. The bloc established a single Eurasian market. Its institutional structure comprises four main bodies: the Supreme Eurasian Economic Council (heads of state), the Eurasian Intergovernmental Council (heads of government), the Eurasian Economic Commission (the executive and regulatory body), and the Court of the EAEU.
Russia holds substantial stakes in advancing the broader Eurasian integration project. Beyond being one of the largest markets in the region, accounting for 72 percent of commercial transactions within the EAEU, Moscow seeks to position the bloc as a link between other large-scale Eurasian economic projects, such as the Belt and Road initiative and the International North-South Transport Corridor. Against the backdrop of Russia’s widening contestation with the West, the EAEU has come to be perceived as a strategic platform for strengthening regional economic integration and mitigating external pressures. The EAEU has gained prominence in Russia’s calculus, ideated in its ‘Greater Eurasian Partnership,’ and outlined in strategic documents like Russia’s concept(s) of foreign policy. In 2018, BRI was officially linked with the Eurasian Economic Union. In the same year, the bloc and the Association of South East Asian Nations (ASEAN) signed an MOU to enhance economic cooperation and entered into a strategic cooperation. Experts highlight that these developments as an indication of Russia’s interest in shifting supply chains Eastward from Europe to Asia.
Table 1.1: EAEU Members and Observer States
Source: Eurasian Economic Union
Table 1.2: Evolution of the Eurasian Integration process
Source: International Economics (178)
Internally, trade volumes between EAEU countries have seen an uptick since the bloc’s inception. For context, in 2015, trade among EAEU members stood at US$45.6 billion. However, by 2021, trade increased to around $70 billion (see table 1.3); meanwhile, the overall foreign trade stood at US$844.2 billion. States have benefited from increasing intra-EAEU trade. Kazakhstan has gained from access to new markets and greater prospects for technology transfer under the EAEU framework. Reforms in taxation, banking, and customs have supported its efforts to diversify beyond hydrocarbons. Similarly, Armenia and Kyrgyzstan have seen rising exports and corresponding improvements in their economies. This growth has been supported by flexible customs policies that have fostered a conducive environment for trade, particularly boosting exports of agricultural products, minerals, light industrial goods, and beverages. Notably, one of the EAEU’s most significant achievements has been the establishment of a unified labour market, which allows for the free movement of workers across member states. This has not only facilitated employment generation but also stimulated broader economic activity throughout the Union.
Table 1.3: Trade Between EAEU Countries, 2005-2021
Source: Secondary Data Accessed From UN COMTRADE
Russia’s invasion of Ukraine marked a significant turning point in the trajectory of the EAEU. Notably, none of the member states condemned Moscow’s actions or joined the Western sanctions regime, while Belarus was the only member to openly express support for Russia. In the aftermath of sanctions and Russia’s exclusion from the SWIFT payment system, member states played a key role in facilitating Moscow’s parallel import system, established in March 2022. Through this mechanism, sanctioned goods were rerouted via Caucasian and Central Asian countries to Russia, softening the blow of sanctions on the Russian economy.
Russia’s role within the bloc since the onset of the war has been perceived ambivalently, both as a lynchpin for integration in Eurasia and as a source for political divergence.
In 2022, the EAEU amended over twenty regulations related to customs and tariffs to ease pressure on businesses. These measures included maintaining zero import duties on select products and advancing de-dollarisation efforts by expanding the use of national currencies in intra-EAEU settlements. As a result, intra-bloc trade increased notably, with most member states (except Belarus) recording high GDP growth rates in 2022, including Armenia, whose GDP grew by 14.2 percent.
Parallel to the rise in intra-regional economic activity, the EAEU also strengthened its external economic partnerships. The bloc successfully concluded trade agreements with countries across the Asia-Pacific and the Middle East (see Table 1.4). In 2022, trade with the BRICS, Shanghai Cooperation Organisation (SCO), ASEAN countries, and other non-Western states grew by 35 percent, reflecting an expanding non-Western orientation in the EAEU’s trade profile.
Table 1.4: EAEU’s Foreign Trade Agreements
Source: Eurasian Economic Commission
In the recent past, India has expressed interest in concluding an FTA with the EAEU. The conclusion of the terms of reference in August this year to ‘officially’ commence negotiations was a reflection of New Delhi’s seriousness in scaling up engagement with the EAEU. India’s interest stems from its need ̧to enhance its footprint in Eurasia. With substantial equities in Eurasian connectivity projects such as the International North-South Transport Corridor (INSTC) and the Eastern Maritime Corridor, New Delhi perceives that an FTA with the bloc will increase private sector interest in strengthening engagement with Eurasian markets. Even though the dividends of the FTA will take years to materialise owing to political and economic challenges — such as India’s relatively low export dependence, and other challenges in the realm of connectivity — New Delhi believes that emerging niches in the Russian economy, created by sanctions and accompanied by the relaxations in non-tariff barriers, could be exploited by Indian manufacturers.
Even with the uptick in trade and the conclusion of new foreign trade agreements, the wartime development of the bloc has come at considerable costs. The war in Ukraine has complicated efforts to advance the Union’s financial and political integration in a genuinely supranational format. Russia’s role within the bloc since the onset of the war has been perceived ambivalently, both as a lynchpin for integration in Eurasia and as a source for political divergence.
Analysts contend that Moscow’s economic priorities increasingly outweigh the collective interests of the EAEU, thereby exacerbating existing structural asymmetries.
The tightening of sanctions and the reduced foreign investment arriving in Russia have made member states more cognisant of the economic challenges in doing business with Moscow. The fluctuations in the Russian economy have produced mixed spillover effects across the bloc, benefiting some sectors while undermining overall stability. Analysts contend that Moscow’s economic priorities increasingly outweigh the collective interests of the EAEU, thereby exacerbating existing structural asymmetries. These include the uneven distribution of customs duties favouring Russia, and its attempts to enforce uniform regulations on areas such as the export/import of industrial goods, causing friction with its partners. Another persistent challenge lies in the limited diversification of trade within the Union. The economies of Russia, Kazakhstan, and Belarus remain heavily dependent on the export of hydrocarbons and minerals, constraining the bloc’s comparative advantages and long-term resilience.
Despite the aforementioned challenges and the limited prospects of the bloc evolving into a supranational union akin to the European Union, the past decade has been transformative for the EAEU. It has demonstrated adaptability in the face of unprecedented geopolitical disruption, most notably by facilitating the rerouting of trade flows and expanding its network of external partnerships. These developments underscore the Union’s growing relevance. Looking ahead, its continued relevance will stem not only from its capacity to anchor regional economic integration but also from its role in advancing the vision of a polycentric world order. The bloc’s expanding outreach through ongoing trade negotiations with major economies such as India, Indonesia, and Egypt further reinforces this trajectory. In essence, the EAEU’s first decade reveals that the project is still in flux — one that, despite its constraints, continues to shape the contours of Eurasia’s emerging economic order.
Rajoli Siddharth Jayaprakash is a Junior Fellow at the Observer Research Foundation.
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Rajoli Siddharth Jayaprakash is a Junior Fellow with the ORF Strategic Studies programme, focusing on Russia’s foreign policy and economy, and India-Russia relations. Siddharth is a ...
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