At the beginning of July, Russia, Kazakhstan and Belarus signed a number of protocols establishing a customs union between the three countries. The union, scheduled to be fully operational in January 2012, will create a single common market of about 170 million people and represents the latest of several attempts by Moscow to create an effective trade bloc with its newly independent neighbors since the break-up of the Soviet Union. In addition to the economic ties maintained through the establishment of the Commonwealth of Independent States (CIS), Russia first committed to a union with Belarus in 1994. That was followed by another in 1996 with Belarus and Kazakhstan, which after gradually expanding to include Kyrgyzstan, Tajikistan and Uzbekistan was renamed the Eurasian Economic Community (EurAsEC) in October 2000. Nonetheless, little concrete action has followed these ambitious announcements, leading Moscow to try again with the restricted formula.
The economic benefits of unions of this kind are questionable, however. Trade blocs among middle-income countries with similar economic structures and natural resource endowments are costly to implement and hardly generate new trade beyond the distortive flows triggered by an inevitable trade-diversion effect. That has led some analysts to speculate over why Moscow has assigned such a remarkably high priority to these projects. ...