Armenia’s U-turn — for Better or Worse


By Edmond Y. Azadian

For the last three and a half years, Armenia had been negotiating with the European Union (EU) to sign the Association Agreement, yet on September 3, at the conclusion of the meeting between Presidents Serge Sargisian and Vladimir Putin in Moscow, Armenia’s president announced that his country had decided to join the Customs Union with Russia. Polls in Armenia were indicating that 72 percent of the population preferred joining the EU, in anticipation of internal reforms bringing the country up to European norms, in terms of economic development, democratic processes and rule of law. But the president’s announcement caught everyone by surprise, since there had been no debate in parliament, nor was a public referendum held.

The negotiations of the EU Association Agreement (including a deep and comprehensive free-trade area) with Armenia were finalized in July. Upon learning about Armenia’s U-turn, the European Commission issued a memo, stating, “This agreement would allow Armenia EU support, to drive forward a program of comprehensive modernization and reform based upon shared values, political association and economic integration.”

Although the European Union has not expressed forcefully its disappointment with Yerevan’s decision, Western media has. The Wall Street Journal normally does not dwell much on what goes on in Armenia, but it published an article in its September 5 issue with the following headline: “Armenia Jilts Europe, Ties Trade Knot with Moscow.”

Commenting further, the Journal writes, “European diplomats were stunned this week by word that Armenia, which had been heading toward strengthening ties with the European Union, will instead join a Customs Union led by Russia — handing the Kremlin a victory in its tug of war with Brussels for influence in the region.”

The EU commission had limited its remarks to a wait-and-see position, announcing that it will wait for clarifications from Yerevan. One thing was clear — the two sides’ agreements were mutually exclusive. A few apologists with the current administration had announced that Armenia’s shift towards Russia would not take place at the expense of severing its ties with the EU. But the latter does not see the situation that way. European officials say that countries in the Moscow-led Customs Union cannot be integrated into the EU because they have effectively ceded their sovereignty over trade issues to Russia.

In terms of its economic clout, Armenia does not weigh significantly on either side of the fence given the size of its gross domestic product — $10 billion. The issue hinges more on politics — the West has been trying to increase its influence in the region by luring Azerbaijan and Georgia, while Russia has been trying to develop a counter-weight through its economic associations, Therefore, Armenia’s shift is symbolized as a political victory in this tug of war.

Thus far, only Belarus and Kazakhstan have joined Russia’s Customs Union because Belarus economically depends on Russia. As for Kazakhstan, its demographic balance tilts it towards Russia since the country’s population is composed of 63 percent Kazakhs and 24 percent Russians. Moscow can easily manipulate that population to influence the country’s orientation.

Ukraine has joined the Customs Union as an observer member, after President Putin closed Russia’s borders for a while against the Ukrainian imports.

Georgia is sending mixed signs, after Moscow began importing Georgian wines and holding the carrot for more economic benefits. Prime Minister Bidzina Ivanishvili announced that Georgia will study the terms of the agreement and may join the Customs Union if it finds the terms beneficial. That remark was rebuked publicly by the lame-duck President Mikheil Saakashvili.

Thus Armenia is firmly in Moscow’s quarter because the EU officials believe Russia has exerted irresistible pressure on President Sargisian.

It was very apparent at the outset, when President Putin visited Baku and Russia’s $4-billion arms shipment to Azerbaijan coincided with that trip.

Friendship with powerful countries does not yield much benefits, but absence of that friendship may cost them dearly.

It is believed that Putin may have used two pressure points against Armenia: the Karabagh issue and the delivery of energy. No one believes that Russia will side with Armenia in resolving the Karabagh problem. But it can use it as leverage to extract concessions, like in the case of the Customs Union.

No one knows yet what is in that agreement, except its political implications. One analyst has used the metaphor of a man stepping out of a window into the fog.

The current administration and its supporters have been defending the president’s decision, while others criticize it harshly. When Russia itself is in dire need of economic reform, how will that impact its partners?

Former President Levon Ter-Petrosian, who refrains from making public commentaries since the last presidential election, has lambasted President Sargisian’s handling of the issue, always mindful that Armenia should never antagonize Russia.

Former Prime Minister Hrant Bagratian has called for a referendum on the agreement. The ARF has issue an unusually-mild statement, saying that the initiative was not wrong but was not handled properly.

There is lively public debate in Armenia. One burning question is: How does Armenia join the Customs Union, with or without Karabagh? The answer to that question makes a whole world of difference. In the case of military treaty it has not been properly defined whether Russia will defend Armenia if attacked. But does the defense also cover Karabagh?

There are many unanswered questions regarding Armenia’s adherence to the Customs Union and Armenian-Russian relations in general.

When the dust settles, people in Armenia will find out if the U-turn was for better or worse.