Armenia Looks West as Eurasian Project Frays

Three months after Armenia joined the Eurasian Economic Union, its leaders seem to be having second thoughts.

When Eurasian bloc members held a summit in Kazakstan’s capital Astana on March 20, Armenian president Serzh Sargsyan was not even there. Officially, he was visiting Brussels instead. Unofficially, he was just not invited.

As host of the summit, the Kazakstan government did not say why the Armenian leader was not present alongside his Russian, Belarussian and Kazak counterparts.

Armenian officials made no comment about Sargsyan’s absence, either. Nor did they explain why he went to Brussels to see top European Union figures instead.

The day before the summit, Sargsyan met Donald Tusk, president of the European Council, a body made up of EU heads of state and government. They discussed closer relationship between the EU and Armenia, and possible legal arrangements for this. Sargsyan also had time to meet with German chancellor Angela Merkel.

Years of planning work on an EU Association Agreement were effectively dumped in September 2013 when Sargsyan made the surprise announcement that Armenia was to become part of the Russia-Belarus-Kazakstan Customs Union. As the Eurasian Economic Union took shape last year, Armenia moved seamlessly to become part of this broader structure built on the Customs Union.

Talks with the EU have continued on the back-burner, for example with a visa agreement that came into force last year.

Sargysan’s visit and its timing seem to hint at a desire to revive the relationship with Europe.

Part of the reason is that the Eurasian union is not delivering as much as was promised. Official data show trade among Russia, Kazakstan and Belarus falling rather than rising for the second year running. With a smaller and weaker economy than those founding members, Armenia cannot expect to perform any better within the trading bloc.

To make matters worse, the damage that falling oil prices and Western sanctions have done to the Russian economy is affecting its neighbours, Armenia among them. To take one example, the hundreds of thousands of Armenian nationals working in Russia should benefit from greater freedom-of-movement rules as Eurasian bloc members, but opportunities are falling due to slackening demand for labour.

Despite this gloomy economic outlook, president Putin used the Astana summit to promote a new idea – a common Eurasian currency.

Referring to an apparent the presidents of Kazakstan and Belarus, Putin said “We think the time has come to talk about the possible creation of a currency union in future.”

Kazakstan’s Nursultan Nazarbaev and Belarussian president Alexander Lukashenka avoided commenting on the currency issue, but both appear increasingly concerned about Russia’s designs on their countries. 

The Armenian government did not comment, either, but a statement from a central bank official made the position clear.

“During the process of accession to the Eurasian Economic Union and in the treaties that were signed, there was no clause on introducing a common currency,” the bank’s deputy chairman Nerses Yeritsyan told journalists “The Central Bank of Armenia has held no talks on moving to a common currency, and no such talks are currently planned.”

Stepan Safaryan, director of the Armenian Institute of International and Security Affairs, believes Moscow sees currency union as just another way of exerting control over its neighbours.  

“In the case of Armenia, it is already apparent that the country’s interests are being harmed. The Armenian president doesn’t even get invited to a discussion on important issues,” Safaryan told IWPR. “The way Armenia’s interests are being ignored has reached a level where Yerevan is making its discontent public.”

Vahagn Khachatryan of the opposition Armenian National Congress says that Eurasian union member states are not structurally or economically ready to use the same currency. 

“It took decades for European states to create a common currency. The Eurasian Economic Union has existed for less than three months but there’s already talk of a common currency. In economic terms, it’s wrong to be talking about a common currency since member states don’t have the same kind of deep integration [as the European Union], and the union finds itself in an economic crisis.”

Armenia has additional reasons of its own for feeling annoyed with Russia. Although Moscow is a longstanding ally that maintains troops on Armenian soil as well as controlling major economic assets there, it also sells weapons to Azerbaijan, with which Armenia is still technically at war despite the 1994 ceasefire agreed at the end of the Nagorny Karabakh conflict. Fatal cross-border shooting incidents are common, and January saw a sharp rise in clashes.

Oil wealth has allowed Azerbaijan to go on a sustained defence spending spree in recent years, most of the money going to Russian firms for advanced tanks, attack helicopters and artillery systems. Armenia’s modest resources mean it is falling further and further behind in the arms race.

President Sargsyan first voiced concerns in public about Russian arms sales to Azerbaijan last July , and he reiterated the point in no uncertain terms two days before the Astana summit.

“The problem is that an Armenian soldier standing on our border or on the Line of Contact [around Karabakh] is aware that they are trying to kill him with Russian weapons. That’s the worst thing, and it may have a negative impact on our relationship [with Russia],” Sargsyan said at a March 18 press conference.

Safaryan notes that the president’s outspoken criticism of Moscow came just before he left for Brussels.

“Armenia is expressing disappointment with the Eurasian Economic Union and hinting that the promises it was made haven’t been kept,” Safaryan said. “Armenia joined the Eurasian union for a number of reasons – investment, a new nuclear power station, and defence technology. It has received nothing in any of these areas.”

Armen Karapetyan is a freelance journalist in Armenia