Bloomberg’s Nariman Gizitdinov and Anthony Halpin note that ongoing currency wars in the Eurasian Economic Union, specifically between Russia and Kazakhstan, promise to undermine the already shaken basis for post-Soviet integration.
Kazakhstan sent its currency lower last week after businesses complained that Russian companies had flooded domestic markets with cheaper goods. In Belarus, the Eurasian Economic Union’s last founding member, the nation’s trade deficit with Russia widened by a quarter last year.
Putin’s vision for his ex-Soviet trading bloc, already curtailed by the war in Ukraine, is suffering widening divisions among members as oil prices and sanctions weaken the ruble and shrink Russia’s economy. Already wary of Russia’s dominant role, the reaction to some of its companies’ actions risks damaging the union’s goal of closer integration.
“Because of the creation of a united economic zone, Kazakhstan and Russia, especially metals producers, entered into a trade war,” Vladimir Kim, majority shareholder of London-listed KAZ Minerals, said as entrepreneurs met Kazakh President Nursultan Nazarbayev after Thursday’s devaluation.
The ruble is the past year’s worst performer against the dollar, sinking 49 percent, data compiled by Bloomberg show. Belarus’s ruble has tumbled more than a third, losing 4.9 percent on Monday alone, while the currencies of Armenia and Kyrgyzstan, the Eurasian Economic Union’s two newest members, have lost 15 percent and 16 percent.