America and the European Union had been considering instituting economic sanctions again Russia following its Annexation of Crimea; however, Europe was not fully on-board.  If the U.S. had enacted them alone, or perhaps with just a few European Allies, that would have merely shifted trade with Russia to the rest of Europe.  After the pro-Russian Separatists in Eastern Ukraine shot down Malaysia Airlines Flight MH17 last year, with many Europeans aboard, however, there was a total change of heart among the Allies as all partners quickly agreed to institute the sanctions.

The European Nations, as a group, have been the major trading partner of Russia, both as a client and as a supplier.  Putin has been claiming all along that the sanctions would hurt Europe more than they do Russia; however, Moscow has much less in the way of trade alternatives.  The increased sanctions–mostly financial and technology–seem to have further increased the pressure on Russia’s economy, which had been dysfunctional even before its aggression into Ukraine had begun.

Putin does boast occasionally about the Eurasian Economic Union, which was only formed in 2013.  With the addition of Armenia this past January 2, Russia is also joined by Belarus and Kazakhstan.  As a group, the EEU has a total population of only 169.2 Million and a GDP of $2.21 Trillion, of which Russia represents 86%.  Similar statistics for Europe are 507.42 Million population and $18.40 Trillion GDP and, for the U.S., 316.13 Million and $16.80 Trillion, respectively.  So Vladdie, who’s kidding who?

Ukraine had long been considered the “Breadbasket”–mostly for corn and wheat–for much of both Europe and the former Soviet footprint.  It had been second in global agricultural exports after the U.S. Agribusiness made-up 24% of Ukraine’s total export volume and five percent of its GDP.  Of the two Ukrainian seaports that were the key shipping points for agricultural products, Odessa is still functioning; however, the more important one, in Sebastopol, Crimea, is inaccessible due to the Annexation.  Thus, the grain export shortage has caused pricing pain in Europe, as well.

A key factor in the equation is that there is not one marketable currency within the EEU. That means that the four member nations are as much in search of Dollars, Euros, Pounds, etc. as they are in finding the necessary imports.  An article in The Diplomat, a current-affairs magazine, based in Tokyo, which covers the Asia-Pacific region, is linked as follows: http://thediplomat.com/2015/01/eurasian-economic-union-dead-on-arrival/.

Within the EEU, Russia seems to act like it is still calling all the shots; however, the other members stress that they, indeed, are now equal partners.  Some might wonder to what extent Russia truly wants the trade group to even survive.  However, the member nations still must respect Russia’s might!

Several of the squabbles that Russia has instigated within the EEU are: customs disagreements it has with Belarus; it wants its trade partners to abide by its own trade sanctions against the West (which would reduce their own trade); and it wants its trade partners to trade in local currencies, rather than marketable ones.  The Diplomat article suggests that the Eurasian Economic Union, which was touted by Russian media as a new “Giant”, had come into being in a near-stillborn state.  Others say: Dead on Arrival?


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