Eurasian Economic Commission
Legal basis: Treaty on the Eurasian Economic Union
Composition/structure: The Council and the Board
Key functions/jurisdiction: ensuring the implementation of the international treaties; signing international treaties to the extent of the defined competences; a depository of the Union’s international treaties; preparing the Union’s budget, budget implementation; produces decisions, dispositions and recommendations.
Decision-making rules: for the Council – consensus, for the Board – qualified majority of voting or consensus (if it concerns the sensitive topics)
Inter-institutional dynamics and accountability: approves the members of the Commission Board, the responsibilities among the Board members and the termination of their power; the Supreme Council approves the drafts on the Budget; The Supreme Council issues the overall instructions for the Commission.
Part Two:
Research question: Does the European Economic Commission realize its supranational elements?
As a relatively recent phenomena in the world of political economy, the Eurasian Economic Union appears to give a rise to a numerous analysis from scholars on how its organizational structure operates. Scholars tend to conduct comparative studies, draw parallels between the European Union and the Eurasian Economic Union, observing how the study of one political phenomenon could be applied to the other. Yet, while the European Union possesses the supranational characteristics, could one find such characteristics in the Eurasian Economic Union, particularly its regulatory executive body - Eurasian Economic Commission? With the purpose of examining political authority in one of the union’s important institutions, this paper comes to the conclusion that even though the Eurasian Economic Commission Board possesses certain supranational elements, they are not fully realized, as the inter-institutional relations with the Supreme Council and the Intergovernmental Council does not allow the Commission to fully produce the decisions without their involvement –due to the gap in preferences, the principal undermines the credibility of the agent’s decision, and as such, restricts the agent by making decision on its own. In order to present this position in a logical and a coherent way, the paper would start by discussing the existing literature on Eurasian Economic Commission, and how the institution is structured within the union. After that, the paper would proceed to the specification of analytical framework - principal-agent theory that would be further applied to analyze whether the supranational components of the Eurasian Economic Commission are realized in practice. The analysis of evidence would be further provided, after which the results would be discussed.
Literature review
In order to fully grasp how the Eurasian Economic Commission operates within itself and with other bodies of the Union, it is of a great significance to review the existing literature on the Eurasian Economic Commission. Up today, one of the important sources of identifying the structure, functions, competences, and the pattern in decision-making of this institution is the Treaty on the Eurasian Economic Union (2015). Which is why, the review of the Eurasian Economic Commission would hugely rely on this document.
The Eurasian Economic Union (hereafter as the EAEU), as it was defined in the Treaty on the Eurasian Economic Union (2015), consists of several institutions, main of which are the Supreme Council, the Intergovernmental Council, the Eurasian Economic Commission (hereafter as the Commission), and the Court of EAEU. The Commission plays the role of a permanent governing body in EAEU and contains of two-levelled bodies – the Council and the Board (ibid.). As a whole institution, the Commission is responsible for enduring the implementation of the international treaties, signing international treaties to the extent of the defined competences and is considered as a depository of the Union’s international treaties (ibid.). Apart from this, the Commission prepares the Union’s budget, reports concerning the budget implementation and generally has a control over the ‘funds of the Commission’s budget estimate’ (ibid.). As a result, the Commission produces decisions with binding effect on the Union’s member states, dispositions concerning the administrational and organizational matters, and recommendations that are non-binding.
As it was mentioned before, the Commission consists of the Council and the Board. The Council performs more of a regulatory function – in other words, it manages the Commission’s activities and generates the regulation the Union’s integration processes (Treaty on the Eurasian Economic Union, 2015). The Council works on improving the legal regulation of activities around the Union, controls the implementation of international treaties, approves the Union’s draft budget, instructs the Board, approves list of the Commission’s Departments, their structure, along with the total staffing, their qualification requirements, remuneration and distribution among the Commission (ibid.).
The Council consists of one representative from each of the Union’s member state, who holds the position of the state’s Deputy Head of the Government (Treaty on the Eurasian Economic Union, 2015). There is also a chairmanship of the Council occurring, where Chairman is arranged on a rotational basis for the term of 1 year (ibid.). The Chairman prepares the issues for consideration on the meetings, sets the agenda, and, generally, chairs the meetings of the Council. For a certain decision to take place, the decision-making in the Council should be done by the consensus, otherwise the issue is brought to the consideration of the Supreme Council or the Intergovernmental Council (ibid.).
The Board of the Commission, on the other hand, plays more of an executive role in the Commission. Unlike the Council, the overall number, the allocation of responsibilities, as well as the appointment of the Board’s members is approved by the Supreme Council (Trety o the Eurasian Economic Union, 2015). Currently, there are 10 members, 2 members from each of the Union’s member state, who are appointed for a term of 4 years. Among these 10 Board members, the Supreme Council also appoints the Chairman of the Board for a term of 4 years, where the Chairmanship is passed on a rotational basis with no right to prolong the position (ibid.).
One of the main functions of the Board of Commission is the management of the Commission’s departments (Treaty on the Eurasian Economic Union, 2015). Yet, apart from that, the Board is also responsible for the advancement of the proposals, the adoption and the implementation of decisions, dispositions and recommendation, monitoring of the Union’s international treaties’ implementation, providing annual progress reports for consideration to the Council and the development of recommendation on relevant issues, development of the Union’s draft budget, creating the drafts for the international treaties (ibid.).
The Board members work in the Commission on the permanent basis and are required to act independently from officials or public authorities of the member states, as well as government authorities (Treaty on the Eurasian Economic Union, 2015). In other words, the interaction between the Board members and the abovementioned actors could only take place in accordance with the Procedure of International Cooperation of the EAEU. For such reasons, one would expect to see the minimum of government authorities’ intervention into the decision-making of the Board.
Analytical framework: Supranationalism, Principal-Agent Theory
Before one could actually analyze whether the supranational elements are realized in the Commission, it is of a great importance to, firstly, define, what supranationalism actually is. The supranational approach, as it was stated by Bache et. al. (2011, 14), hugely relies on the notion of transnationalism developed by Deutsch (1953; 1957) and the new institutionalist theory of governance that scholars tend to apply for the studies of the European Union. One of the most important elements in the supranational government is the establishment and the development of transnational societies – the ones that are not limited to national boundaries, and instead are seeking to interact in a network that transcends the idea of nations. Once these societies gain meaningful autonomous capacities, they would actually become capable of pursuing the integrative agenda in the region (Bache et. al. 2011, 14). For instance, when applied to the case of the European Union, the supranationalism approach views it as a series of regimes different for each of the policy sectors, that attempt to regulate the specific sector at the European Union’s level, or, in other words, ‘Europeanize’ the sector (ibid.). As such, with autonomous capacity to act independent of national restrictions, transnational societies would focus on resolving ‘international policy externalities’ – unintended consequences of certain state’s policies that are followed by the other (ibid.). To attain this goal, supranationalism allows the relevant-to-the-sector actors to emerge and construct policies that would affect integration process on the whole union-level.
It is possible to see the elements of supranational governance in the Commission, particularly, in the Board. The Board manages specific Departments, that focus on the specific competence area of the Commission, thus, making it possible to imply that the Commission Board and its Departments consist of members from different states that have expertise in the specific area, and work in the Department to draft the decisions, dispositions, recommendations and other materials relying more on the expertise and knowledge of the materials’ relevance on the union-level, rather than the specific country. The way the Treaty on EAEU stresses the need of the Board members to act independently of government officials could also tell us that this body was designed to realize the supranational elements. Which is why, it is expected to see the elements of supranationalism in the Commission.
Yet, does the Commission realize its supranational elements? To identify the extent to which supranationalism takes place in the Commission, it is necessary to look at the EAEU’s inter-institutional dynamics. For this paper, the principal-agent theory would be chosen, as it would allow one to see the restraints put on the supranational bodies, such as the Board and the Commission departments, from government authorities.
The Principal-Agent Theory focuses on the relation dynamics between the principle and the agent. As a part of the rational choice approach, the theory asserts that the principle delegates certain powers to executive or judicial bodies to decrease the “the transaction costs of policy-making” (Pollack 2007, 3). As a result, the agent becomes provided with a certain level discretion, as the principal expects the credible commitment and performance, as well as the provision of the information relevant to the expertise area of the agent (ibid.). Yet, at the same time, with the delegation of power, there is also a gap in a preferences of the principle and the agent, which is why the oversight mechanisms play a huge role in the shaping the dynamics of relations between the principle and the agent (ibid.).
In the studies of the European Union, rational choice institutionalists emphasize the possible difficulties that might arise when the principal (in the context of the European Union, the national governments) attempts to control their agents’ (the supranational bodies) activities (Bache et.al. 2011, 24), and we could actually apply the same model to the EAEU’s case. While the national governments seem to be quite distant from the Commission Board of the EAEU, the institutions like the Intergovernmental Council and the Supreme Council might play the role of the agent in the context of the EAEU. The Supreme Council, the Intergovernmental Council present the formal institutions of government – the Supreme Council consists of the heads of the EAEU’s member states, while the Intergovernmental Council consists of the EAEU member states’ heads of the governments. And, as these institutions constitute key actors, who define the general vision and the agenda for the whole union, they could be considered as the principals in our analysis framework.
Yet, what oversight mechanisms are used between the Supreme Council/the Intergovernmental Council and the Commission? The Treaty on the Eurasian Economic Union (2015) makes it clear the Supreme Council approves the members of the Commission Board, as well as responsibilities among the members and the termination of their power. It also has a final say in the regulation, implementation and he overall approval of the Budget of the Union (ibid.). And in cases when the Commission Council is unable to reach the consensus, the issue is brough to the Supreme Council for the final decision (ibid.). Therefore, it is expected to see possible application of these oversight mechanisms from the Supreme Council when the preference gap is huge.
Analysis
Scholars tend to argue that the Eurasian Economic Union is a merely “Russian hegemonic project”, where Russia would exercise dominance in the decision making, thus, questioning the nature of supranationalism in the EAEU, in general. Kirkham (2016), for instance, argues that the asymmetry in the size of economies of EAEU’s member states creates the situation, where Russia contribution to the Union’s GDP is more than 80%, whereas states with smaller economies, like Belarus account for only 3% (ibid.). As such, this disparity creates difficulties for the development of economic integration and necessitates a huge consideration for Union’s bodies to produce legal acts that would further advance the integration beneficially for all sides at the union-level (ibid.). What is more, the benefits from the integration are also unequal. To be more specific, there is a huge difference in oil and gas sector benefits – Kazakh oil exporters, in comparison with the domestic producers, have to higher transit tariffs in Russia, and does not have equal access to the pipelines located in Russia (ibid.). Such observations might, indeed, make one question the transnational society’s ability to reduce the international policy externalities and whether the Eurasian Economic Commission, would, indeed capable of displaying its authority to produce decisions on the union-level.
Along with this position, the closer analysis into the issue of supranational elements in the Commission could also show us that formally, the Commission does not possess the full autonomy to display its supranational elements. As it is argued by Khurmatullina (n.d., 8), the supranational elements are present only in the Commission Board, and as long as it directly reports to the Commission Council –, which, according to the author, has lower level of supranationalism- , or the Board’s meetings are attended by the members of the Council, it is almost impossible to see the full potential of the Board’s supranational characteristics (ibid.). What is more, the ability of the Intergovernmental Council or the Supreme Council to intervene in the final decision of the Board also undermines the notion of the development of transnational societies’ action on the whole-union level, and makes the relations within the union to appear more like a hierarchical subordination (ibid.). In other words, formally, the agent is hugely restricted in its authority to act in full capacity by the agents, who hold relatively more power.
Nevertheless, there are still cases when the veto by member state has been rescinded and thus, prevented the establishment of single domestic market. To be more specific, on April 30, 2019, the meeting of the Intergovernmental Council has managed to adopt the resolutions on the cancellation of veto on the Commission Board (Kofner, 2019). To be more precise, Russia’s long lasted veto on the Commission Board’s decision regarding the free circulation of dairy products that are made in Belorussia in the Russian market. The Commission Board recognized the ban of Belorussian dairy products that did not meet the Russian food safety standards as a violation, thus pressuring Russian government for response (ibid.). Russia, eventually, decided to withdraw the veto, allowing Belorussian dairy products with the its domestic certification to enter the Russian market, while putting the temporary bans on those enterprises that require thorough inspection. And this case is not the only case where the Commission Board managed to display its authority at the union-level. Kazakhstan has also vetoed the Commission Board’s decision concerning the anti-dumping measures, yet the veto has been withdrawn, when the member states managed to reach the agreement (ibid.).
So, what do such observations tell us about the ability of the Commission to display its supranational characteristics? Firstly, as one could probably notice, the Commission does not seem to be directly involved in the process of negotiations – the above-mentioned cases were held at the level of the Intergovernmental Council. Although one could claim that the agenda of the meeting is prepared by the Commission, it was the specifically the Intergovernmental Council’s members decision to withdraw the veto and adopt the decisions by the Commission. As such, instead of showing how well supranational governance is taking place in the EAEU, the above-mentioned cases rather show that the member states do frequently veto the Commission Boards decisions, and as such, strengthening Khurmatullina’s argument on the hierarchical subordination.
What is more, putting forward the veto does show that, as a principle, institutions, that take a higher position in this hierarchy (the Supreme Council and the Intergovernmental Council) do restrict their agents in cases of a huge gap in the preferences. The case of Russia’s veto, as well as Kazakhstan’s one, show that the dynamics of relations and preferences in the Commission is different from their principle’s, and in these cases, the agent undermines the credibility of their agent’s decision, leaving no other option than to make the decision on their own.
Conclusion
Based on the ideas above, it is possible to see that the Commission has a unique position among the EAEU’s institutions. Being divided into two-levelled bodies, the Commission formally appears to possess the supranational elements, such as the ability to make decisions independent of nation state’s government authorities and officials, to be organized and structured according to the sector/ the area of expertise, rather than on the basis of states, they work for. Still, as it was mentioned above, the decision-making procedure at the union-level leaves little place for the Commission to make decisions without the involvement of other institutions, particularly the Supreme Council and the Intergovernmental Council. As the observations show us, such institutions have enough authority to issue the veto against the Commission’s decisions, thus making it difficult for the Commission Board that it is fully supranational.
The principle-agent theory has also allowed us to see that in the cases of a disparity in interests between the principle and the agent, the former tends to question the credibility of the agent’s decision, and as such, makes the decision on its own.
Still, there are several questions that were left unanswered. To what extent would EAEU’s supranational elements contribute to the development of the union’s further integration? Does the Commission need to be fully supranational to perform its activities? What might be the obstacles that does not allow scholars to see the supranational elements in the EAEU?
The EAEU is a relatively new phenomenon, and the existing observations on the dynamics of inter-institutional relations that were shown above might not be the same in the long run. In other words, to see the observable patterns in the behavior of institutions, and how these institutions interact with each other through the lenses of principal-agent theory, there is a need to observe more lengthy set of data.
References
Ian Bache, Stephen George and Simon Bulmer. (2011). ‘Theories of EU Governance,’ in Id. Politics in the European Union. Oxford University Press.
Khurmatullina, Alsu. (n.d.). The supranationality problem in the formation of interstate associations (the case of the Eurasian Economic Union). https://kpfu.ru/staff_files/F2131226407/75.JEEER_en.pdf
Kirkham, K. (2016). The formation of the Eurasian Economic Union: How successful is the Russian regional hegemony?. Journal of Eurasian Studies, 7(2), 111-128.
Kofner, Yuri. (2019). “Greater Eurasia. Five Years On: The Eurasian Economic Union in Action”, RIAC (May 10, 2019) https://russiancouncil.ru/en/blogs/GreaterEurasiaEnglish/five-years-on-the-eurasian-economic-union-in-action/
Pollack, M. A. (2007). Principal-Agent Analysis and International Delegation: Red Herrings, Theoretical Clarifications and Empirical Disputes. Theoretical Clarifications and Empirical Disputes (February 2007).
Treaty on the Eurasian Economic Union. (2015). https://docs.eaeunion.org/ru-ru/Pages/DisplayDocument.aspx?s=bef9c798-3978-42f3-9ef2-d0fb3d53b75f&w=632c7868-4ee2-4b21-bc64-1995328e6ef3&l=540294ae-c3c9-4511-9bf8-aaf5d6e0d169&EntityID=3610