The Eurasian Economic Union and Israel have reportedly signed an agreement authorizing the creation of a free trade zone, according to Washington, DC-based Silk Road Reporters. In a further sign of Israel’s pivot to Eurasia, on November 29, Israel suspended contact with the European Union on the Middle East peace process.
The move marked the latest political salvo fired in an ongoing Israel-European Union feud over Brussels’ new product labeling policy for Golan and West Bank settlement exports. According to The Diplomat magazine, that dispute also obscures Jerusalem’s diplomatic achievements in mid-November, when it reportedly entered into a free trade zone with the Moscow-led Eurasian Economic Union (EEU), a bloc comprised of Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan.
The EEU is chaired by Viktor Khristenko, a former Minister of Industry, and First Deputy Prime Minister of Russia. The Union has an integrated single market of 183 million people and a gross domestic product of over USD $4 trillion. According to estimates, the Eurasian Economic Union’s population of 176 million people is mostly urbanized, with Russia and Belarus having over 70% of their population living in urban areas. In Armenia over 64% of the population lives in urban areas. Kazakhstan’s urban population comprises 54% of the country’s total population.
According to The Guardian newspaper, Putin’s plan is for the Eurasian Union to grow into a “powerful, supra-national union” of sovereign states like the European Union, uniting economies, legal systems, customs services, and military capabilities to form a bridge between Europe and Asia and rival the EU, the US, China, and India.
On May 29, 2014, the presidents of Kazakhstan, Belarus and Russia signed the treaty on the Eurasian Economic Union, which came into effect on January 1, 2015. The presidents of Armenia and Kyrgyzstan were also present at the signing ceremony, at which Russian president Vladimir Putin stated, “Today we have created a powerful, attractive center of economic development, a big regional market that unites more than 170 million people.”
“We are not creating a political organization; we are forming a purely economic union,” added Bakytzhan Sagintayev, the first deputy prime minister of Kazakhstan and lead negotiator.
In early September 2015, leaders of the five member states gathered in Kazakhstan’s Borovoe resort area to reportedly sign documents making Israel and China official partners to the trading bloc. Kazakh economist Valentin Makalin told SRR Media that, “Israel’s extremely developed economy makes it a very attractive partner for the Eurasian Economic Union. In 2014 alone, this country’s per capita GDP was at US $39,100 while in Russia it was only $14,400, in Kazakhstan $14,600, and in Belarus $5,500.”
Kazakhstan and Israel have enjoyed a decent level of bilateral trade over the past few years, he says, though he adds that the bulk of Kazakh exports to Israel were oil and gas, and due to the fall in global oil prices, the trade balance had dropped in 2014. On the other hand, agricultural products, pharmaceutical, dominate Israeli imports to Kazakhstan and food products.
“If we create a free trade zone with Israel it just means that this country will start shipping tax-free all of its goods to Kazakhstan,” said Forex Market analyst Arman Beysembayev. “We don’t sell them anything apart from uranium and oil,” he added, according to SRR.
“Russia-Israel ties are fairly strong today, a striking contrast to Jerusalem’s bitter Cold War rivalry with the Soviet Union, says Evan Gottesman, a Lloyd C. Gardner Fellow at Rutgers University, and contributor to The Diplomat. “The two countries boast healthy trade relations and political ties are remarkably strong too – Israel broke with its Western allies and abstained on a United Nations resolution that supported Ukraine’s territorial integrity. While Moscow maintains close relationships with Iran and Syria, Israel appears intent on looking the other way—provided Russia’s actions in the Middle East do not immediately threaten Israeli security. To this end, Russia and Israel established a coordination mechanism to prevent confrontations over Syria. In the aftermath of the shootdown, Jerusalem made a point of distinguishing its behavior vis-à-vis Russia from Turkey’s recent actions.”
“In this context, Israel’s relationship with the Eurasian Union’s primary power makes sense,” added Gottesman. “Israel’s ties with the EEU’s second largest member merit broader explanation as well. At a superficial level, positive relations between Israel and Kazakhstan may appear strange. After all, most Muslim-majority countries do not recognize Israeli statehood. Deeper analysis reveals that there is firm grounding for the Israel-Kazakhstan relationship, especially as Jerusalem experiences frustration with Brussels over the Palestinian question.”
He further stated that, “unlike the EU, Kazakhstan takes a fairly passive approach to the Israeli-Palestinian dispute. This position is not unlike China’s Israel policy. Beijing maintains positive trade relations with Israel and has even collaborated with Jerusalem on defense projects. It follows that Israel enjoys a robust security relationship with Kazakhstan. Over two decades into Kazakh statehood, Israeli contractors continue to help modernize Astana’s Soviet-era military inventory. Israeli firms like Rafael, Israel Military Industries, Israel Aerospace Industries, and Elbit Systems are present in the Kazakh defense sector, supplying everything from UAVs to communications equipment. In January 2014, Israel and Kazakhstan reached a military cooperation agreement, providing an official basis for ongoing arms sales, as well as future technology development and joint training exercises.”
Jerusalem and Astana cooperate in other critical areas outside military exchanges. Kazakhstan provides Israel with over a quarter of its oil needs. Israel assists Kazakhstan in developing civilian technologies in areas like agriculture, public health, and water management. Beyond practical cooperation, Israel benefits from claiming a Muslim nation as a friend – a rare satisfaction for Jerusalem, according to The Diplomat.