EUROASIAN Union: Regionalizing Cronyism or Despotism?

Russia’s Vladimir Putin has a grand design, he intends to integrate ex-Soviet Union states.

From the Businessinsider.com,

It's likely you've never heard of half of the prospective members of Vladimir Putin's plans for a "Eurasian Union".

However, if the plan goes ahead, you'll need to get familiar with them quick.

A Eurasian Union (EuU) including most of the former U.S.S.R. would become a major counterweight to the EU (a Eurasian Union could control up to 33 percent of the world’s proven natural gas reserves, according to Forbes).

Putin, who floated the idea in October of last year, at the time went to lengths to deny that the bloc would recreate the Soviet Union. However, Russia has already gotten many other former Soviet Union states to sign up for a free trade agreement, including Armenia, Moldova, Ukraine (which was initially set on joining the EU), Kyrgyzstan, and Tajikistan. Uzbekistan, Azerbaijan, and Turkmenistan could follow suit.

Purportedly the union is about a establishing a free trade bloc.

More from Reuters,

Putin said the new union would build on an existing Customs Union with Belarus and Kazakhstan which from next year will remove all barriers to trade, capital and labor movement between the three countries.

"We are not going to stop there and are setting an ambitious goal -- to achieve an even higher integration level in the Eurasian Union," Putin wrote in an article which will be published in Izvestia newspaper on October 4…

Putin wrote that he saw the way out of the global crisis through a regional integration, mentioning the European Union, Asia-Pacific Economic Cooperation, the North American Free Trade Agreement and the Association of Southeast Asian Nations as examples.

"These 'bricks' can assemble into a more stable global economy," Putin wrote.

Politicians espousing free trade or liberalization of the markets have always been welcome news. However one should be leery of any noble sounding intentions, because what politicians say almost always works to the contrary from what they do.

The great Professor Ludwig von Mises says that free trade is about practicing what has been preached

Everybody was in favor of free trade for all other nations and of hyper‑protectionism for his own. It did not seem to occur to anyone that free trade begins at home. For nearly everyone favored government control of busi­ness within his own country.

True to the word of Professor von Mises, we find that the supposed ex-Soviet free trade bloc are composed of mostly economically UNFREE nations.

According to the Heritage economic freedom index, Russia ranks 144^th, Ukraine 163^rd, Moldova 124^th, Armenia 39^th, Kyrgyz Republic 88^th, Tajikistan 129^th and potential participants Uzbekistan 164^th Azerbaijan 91^st and Turkmenistan 168^th.

Except for Armenia and the Kyrgyz Republic whom are classified as moderately free, all the rest led by Putin’s Russia has been mostly unfree.

And the deficiency in freedom has not been limited to economic sphere but has likewise been reflected in their respective political institutions. The following categorization according to Freedomhouse.org

Partly Free: Ukraine, Moldova Kyrgyz Republic

Not free: Russia, Tajikistan. Uzbekistan, Azerbaijan, Turkmenistan

So free trade looks likely a façade to what seems as covert design to control energy reserves which will likely be corralled by the political class and their regional private sector allies.

And like the EU, whom has gone in the direction of a political union, Putin’s union seems like a step towards centralization of the region’s political framework.

Genuine free trade doesn’t need trading blocs or treaties. All that is required of a nation need is to voluntarily open the doors for trade, regardless of the what neighbors or others do.

Again this golden nugget from Professor Ludwig von Mises.

It is hopeless to expect a change by an international agreement. If a country thinks that more free trade is to its own advantage, then it may always open its frontiers. But if it views free trade as a disadvantage to its own interests it will not be more willing to grant it in an international treaty.

Well I hope I am wrong on this, and that such trading bloc will pry open these mostly unfree economies and spur not only regional trade openness but a global one too.