Economists in Armenia See Trade Opportunities, Challenges after Russian Sanctions on Turkey


Flag-Pins-Armenia-RussiaYEREVAN (ArmeniaNow) — Russian sanctions imposed on Turkey over an incident at the Syrian-Turkish border involving a Russian military plane, will go into effect on January 1, 2016, as a result of which the former will not import frozen poultry products, fresh and frozen vegetables, salt and flowers from Turkey.

Some in Armenia want to fill that trade void with Russia. However, not everyone is sure that it will be possible. They mention different reasons.

This possibility was discussed at the level of the Armenian government on Monday. A consultation led by Prime Minister Hovik Abrahamyan on promotion of the export of the local products took place. Vache Gabrileyan, the minister for International Economic Integration and Reforms, introduced the opportunities of increasing the volume of the exports of Armenian products, highlighting the agriculture, tourism and investment sectors.

Abrahamyan urged the business sector to seize the opportunities arising from this situation and increase the amount of exports to the Russian market.

This seems to be a good chance to increase trade with Russia, as it has significantly reduced this year, which is also due to the devaluation of the Russian ruble by 20 percent. It reduces the profitability of Armenian exporters.

According to the National Statistical Service, during the first 10 months of 2015 the exports, in Armenia, decreased by 2.2 percent, and the imports dropped by 26.6 percent. It is noteworthy that the trade turnover between Armenia and Russia dropped even more. From January to October of this year that figure decreased by 14.8 percent. The volume of the exports from Armenia to Russia fell by 29.4 percent and the imports from Russia decreased by 13.1 percent.

However, economists are careful to the point of the Armenian government’s optimism. They say that the Armenian manufacturers will not have the advantage. Some even think that they may suffer from the current situation.

According to economist Ashot Yeghiazaryan, one of the reasons is that Armenian products were not competing with Turkish ones in Russian market, particularly beverages, for example brandy.

“We’re not competing with Turkey’s meat either, because we don’t have so much meat. As for fruit and vegetables, the consumption of these products is mainly done by our countrymen. These products also do not make a large amount in the Russian market,” said Yeghiazaryan, adding that Armenia would not offer a wide variety of fish, either.

“Compared to Turkey, we also have a transportation problem,” the economist said. “The problems, which were in Russia for Armenian exporters, still exist there,” he added.

Experts also express concern that the Turkish goods, which were not imported to Russia because of sanctions, could be brought to the Caucasus, mainly to Azerbaijan and Georgia, and from there could be imported into Armenia to some extent. In this case, due to lower prices, Turkish goods may gain a competitive stance against Armenian products.

However, exporting companies are optimistic, as they have noticed some interest in Russia towards Armenian products.

“At this moment, organizations operating in Russia are looking for products that Turkey will not be able to supply. The volumes are very large, tens of thousands of tons,” Hamlet Tadevosyan, the head of the Spayka LTD’s Ararat food company, told the Haykakan Zhamanak daily, adding that there are agricultural products of good quality in Armenia, but there is a problem of quantity.

“There have been interest and quantity proposals from partners,” he said.