A clear split

The upward trend is over: In 2022, all three BTI indices have also taken a turn for the worse in Eurasia. This has consolidated the political split in the region. While the democracies have proven relatively resilient despite systemic defects and pandemic-related pressures, the autocrats have reacted with repression – fiercely so in some cases, such as in Belarus. Economically, the resource-rich autocracies have better prospects of enjoying a rapid recovery.

In the BTI 2018 and 2020, post-Soviet Eurasia still managed to buck the global downward trend. Now all three indices have taken a downward turn here, as well. One should note, however, that this is the case in aggregate, as the average scores conceal diversity and variance as well as significant regression and some progress, albeit limited.

In terms of political transformation, this conflicting picture is most evident among the democracies. Moldova, the only country to increase its score (+0.35 points), owed its improvement to the departure of oligarch Vlad Plahotniuc, who had literally seized all the country’s institutions. By contrast, five countries saw declines, most notably Kyrgyzstan (–0.55), which has slipped into the category of highly defective democracies. The autocracies, on the other hand, only saw marginal changes – with the exception of Belarus, which is now a hard-line autocracy due to the unprecedented wave of repression following the 2020 presidential elections. In economic terms, as well, the changes in the democracies are both more apparent and more negative than in the autocratic rentier economies. In addition, there are the multiplier effects that are particularly evident in countries whose economies depend on labor migration to Russia (and Kazakhstan).

The region’s heterogeneity is also very closely reflected in its management of the coronavirus pandemic. Eurasia has seen the full gamut of responses, ranging from complete denial in Turkmenistan, to concealment tactics elsewhere with the help of blocked information and manipulated figures, to efficient pandemic management in Mongolia – which is also the only country in the region with good governance.

Political transformation

Ambivalent personalization, problematic judiciary

In terms of political structures, the defining feature of Eurasia continues to be a pronounced reliance on leadership figures and the personality-centered networks associated with them. In addition to characterizing the autocracies, this is also a defining feature of the defective democracies – simultaneously being a success factor and the greatest weakness. Nonetheless, a certain resilience has developed among the latter that has so far guaranteed competitive elections as well as civil liberties and political rights. Despite the restrictions caused by lockdowns and economic downturns, the pandemic has not changed that. For example, following the parliamentary elections in Moldova in the early summer of 2019, a concerted East-West campaign succeeded in ousting oligarch Vlad Plahotniuc. The EU, the United States and Russia leaned on their respective clienteles to overcome pronounced political antagonism and form an alliance, although it limited itself to the neutralizing and exiling of Plahotniuc. In July 2021, early parliamentary elections ended the cohabitation of the liberal president and the socialist-controlled government with an election victory for the liberal – or, rather, pro-European – Action and Solidarity Party (PAS), which was an unprecedented event in the country’s history.

The case of Armenia is even more impressive. By the end of 2020, the dual crisis of the pandemic and dramatic defeat in the war against Azerbaijan appeared to have sealed the fate of the Velvet Revolution and its leader, Nikol Pashinyan. But matters took a very different turn. After Pashinyan agreed to early parliamentary elections under pressure from the president (affiliated with the old regime), the military leadership, the Katholikos and demonstrators, the outcome of June 20, 2021, defied most forecasts. Pashinyan’s Civil Contract party achieved a clear victory by winning 54% of the votes.

The judiciary remains a major problem in many of the region’s defective democracies. Easing this brake on change without compromising its constitutionally guaranteed independence continues to represent an almost insurmountable challenge. This is the case in Armenia and Moldova as well as in Ukraine, where the Constitutional Court torpedoed a core element of the fight against corruption in October 2020. At the request of the Opposition Platform – For Life, a pro-Russia parliamentary group led by Putin confidant Viktor Medvedchuk, it ruled that the law requiring state employees to declare their income was unconstitutional (and thereby also sought to remove members of the judiciary, in particular, from scrutiny). President Volodymyr Zelensky, who had been elected to general surprise a year earlier, suspended the Constitutional Court, but this move then triggered a constitutional crisis.

Autocrats are not confronted with such problems. For them, any separation of powers is either rudimentary or non-existent. Instead, the challenge they face is to hold the reins on the freedoms they introduce in the name of social modernization and economic dynamism. Even in Uzbekistan, where Shavkat Mirziyoyev managed to free himself from his predecessor’s regime, change has so far largely been a matter of style over substance. However, this may gradually widen the gap between growing popular expectations and the defense of the status quo, especially among the civil servants in the state bureaucracy. The example of Belarus illustrates the risks that such policies can pose to a regime – and what can happen if it loses control.

Economic transformation

Russia counting on resilience to sanctions

Regarding the region’s performance in terms of economic transformation, it is also evident that, with the exception of Tajikistan, it is the defective democracies – Mongolia, Georgia, Kyrgyzstan and Armenia – that recorded the most significant declines. In these cases, it is above all the sudden slowdowns resulting from efforts to combat the coronavirus pandemic that have impacted economic performance as well as fiscal and monetary stability. This divides the region into two groups: oil- and gas-exporting countries, which have had relatively minor losses in addition to fiscal buffers, and countries where either national lockdowns or the multiplier effects of tackling the pandemic in Russia and Kazakhstan have shaken macroeconomic stability, with the lack of transfers from migrant workers who have been stranded there or have returned home being particularly impactful.

On the other hand, the price of oil did not play a significant role. In 2019, it was mostly above the $60-per-barrel mark, then it plunged for a few months in 2020 before recovering to $40 per barrel in the middle of the year and then finally rising to over $50. This slump is instructive for the unilateralism and logic of Russian politics. It followed Russia’s March 6, 2020, rejection of Saudi Arabia’s proposal that OPEC+ members should cut production (even more), by 1.5 million barrels a day, in response to the COVID-induced drop in demand. As a result, Riyadh started flooding the market on April 1, which caused prices to nosedive. Moscow’s calculation was largely championed by Igor Sechin, the head of Rosneft, Russia’s largest producer. It aimed to force U.S. producers of shale oil and gas, who had opted not to join in the production cuts, out of the market. The plan failed, but its goals also became less urgent once demand picked up again.

However, the consequences had to be borne by all, which not only highlights the lack of coordination and solidarity within the Eurasian Economic Union (EAEU), founded in 2015, but also the economic policy that Russia has pursued since 2018. This policy can be understood as an effort to bolster resilience to sanctions and is based on two pillars: import substitution and reserve accumulation. Both assign the central role to the state and public investments, such as the National Projects announced by Putin in 2018 at the beginning of his fourth term in office. These 12 projects, with a collective worth of some $300 billion until 2024, aim to boost the Russian economy to new levels and to halt the continuous decline of the country’s share of global GDP. This model will certainly do nothing to reverse structural deficits, such as corruption and the weak regulatory environment; it will only entrench them further. Nevertheless, Russia is undeniably in excellent fiscal shape, with continuously rowing foreign reserve assets of $605 billion (as of May 31, 2021) and a budget deficit of just 3.8% in 2020.

The structural problems of the other rentier economies are similar and include corruption, a bloated public sector with numerous zombie companies, a lack of innovation, and low productivity. And they can be attributed in the same way to the vested interests and deep roots of well-networked interest groups. Demographic pressures, however, are heading in different directions. While its aging society is creating problems in Russia, the populations of other countries are growing rapidly and decidedly young. In Tajikistan, for example, the average age is just 21.


Little willingness to cooperate

When it comes to governance performance, Belarus is a particularly volatile case in the region. While President Lukashenko conducted his 2020 election campaign on a decidedly anti-Russia platform, Minsk is now politically as well as economically totally dependent on Moscow. And after Belarus spent years trying to enhance its international reputation, all these efforts came to naught owing to the unprecedented wave of repression unleashed by Lukashenko in response to the broad-based movement protesting his fraudulent presidential elections, which in turn triggered far-reaching Western sanctions. The country’s international (self-)isolation, which was only exacerbated in May 2021 by an equally unprecedented act of interference with civil aviation to apprehend a regime critic, is a direct result of domestic policies that view civil society solely as a threat.

A second striking example of non-cooperative behavior is Azerbaijan’s breach of its ceasefire agreement with Armenia in September 2020, which concluded after 44 days of war with the recovery of all the territories occupied by Armenia in 1994 and the conquest of a third of Nagorno-Karabakh. The war ended more than two decades of unsuccessful negotiations in the Nagorno-Karabakh conflict, in which the development gap between Azerbaijan and Armenia – and thus the gap in military capabilities – continued to widen, while also further diminishing the trauma of Azerbaijan’s defeat in 1994. Armenia’s self-deception was based on a broad social consensus that even Nikol Pashinyan, the new leader, could not (or did not wish to) sidestep, if only to avoid offering an opening for patriotic attacks from representatives of the old regime.

Russia, bound to Armenia by a mutual assistance treaty and to Azerbaijan by political affinities, remained neutral for a long time and brokered an end to the fighting in November 2020, a few days before the complete defeat of Armenia. This response revealed two things: first, that Russia is still the only power in the region of post-Soviet Eurasia that is willing and able to intervene; and, second, that Moscow only has limited control over its declared sphere of interest, having proved unable to prevent either the war or the interference of Turkey, the external (NATO) power that made Azerbaijan’s success possible in the first place. Here, we see far-reaching trends in Russia’s foreign policy laid bare. On the one hand, its efforts to distance itself from the West have accelerated in the past two years. On the other, more and more countries in the region are breaking away from the control of Moscow, whose restrained response is already interpreted in these countries as a “post-imperial” syndrome.

The experience of Central Asia confirms that regional cooperation is possible even under difficult conditions. This was enabled by a change of course in Uzbekistan, where President Mirziyoyev has made the opening of his country a hallmark of his policies. And it was and remains precarious given the considerable potential for conflict related to water management (with some of the key issues being the construction of the Rogun Dam in Tajikistan and the drying up of the Aral Sea in Kazakhstan and Uzbekistan), erratic and contested borders, and inadequate national transport infrastructures. Also of relevance here is the region’s collective bargaining power both with respect to Russia, for which the EMU and the Collective Security Treaty Organization provide an institutional framework, and vis-à-vis China, which has to date pursued a strictly bilateral course based on self-interest.


Expression of a “post-imperial” syndrome?

In summary, recent years have sharpened the contours of Eurasia’s political divisions, with the democracies proving to be relatively resilient while autocratic regimes have increasingly used repressive means to hold on to power. However, in economic terms, the autocracies – or at least those with resources in energy and raw materials – have an advantage for the time being, as they had already returned to growth by the end of 2020, which accelerated in 2021.

The integration rivalry between the EU’s Eastern Partnership and the Eurasian Economic Union has weakened considerably. Like Moldova, Armenia has proved able to defend its democratic order without significant interference from Moscow. At the same time, it has had to learn the painful lesson that only Russia is willing and able to guarantee its security. The EU’s credibility, on the other hand, suffered considerably in the war with the Azerbaijani autocracy, as nothing more than expressions of solidarity have been heard from Brussels. Whether the EU can restore its credibility will largely depend on how it contributes to overcoming the disastrous consequences of the war, including the unresolved territorial issues related to Nagorno-Karabakh.

While the EU’s limited power to shape security policy was evident in this case, Russia’s political guidance is undisputed only where there is no alternative to Moscow, such as is the case in Belarus. Even the region’s autocracies have no wish to accept rigid lines of demarcation from the West. Russia’s perception of itself as the organizing core of Eurasia only meets with limited agreement in the region. In fact, Russia tends to be viewed instead as the political bridge between China and Europe and as the only actor in the region able to contain the Chinese challenge. And viewed in this way, the concept could very well be understood as an expression of a “post-imperial” syndrome.