Armenia-Russia: Old ties, new projects, uncertain future

Armenia-Russia: Old ties, new projects, uncertain future

Analysis | 15.10.12 | 13:53

By Naira Hayrumyan
ArmeniaNow correspondent

Despite the optimistic tone of the meeting of the Armenian-Russian
intergovernmental commission, which took place in Yerevan late last
week, it still revealed the reluctance of Yerevan to strengthen its
ties with Moscow.

First, it was stated that Yerevan is categorically against the Russian
immigration program, Compatriots, by which about 5,000 Armenian
citizens have left Armenia and settled down in Russia. Second, at the
government level it was reiterated that Armenia is unwilling to join
the Customs Union of Russia, Kazakhstan and Belarus – a new
integration process in the former USSR territory expected to
consummate in the establishment of a Eurasian Union later this decade.

As a result of their Yerevan meeting the Armenian and Russian sides
only signed a program of long-term economic development until 2020
which provides for `an ambitious growth of bilateral trade relations
and investments’, as it was stated by Armenian Prime Minister Tigran
Sargsyan. In saying that, officials still did not point to a single
major project in which Armenia expects Russian investments. The matter
may concern the construction of a new unit of the Armenian nuclear
power plant and the Iran-Armenia railroad. The future price of Russian
natural gas supplied to Armenia was not specified either.

Judging by the statements, Russia insisted on Armenia’s joining the
Customs Union, making both investments and the price of natural gas
contingent on this move.

Russian Transport Minister Maxim Sokolov expressed confidence that the
parties would be able to agree on a mutually acceptable price of
natural gas.

Armenia’s Minister of Energy and Natural Resources Armen Movsisyan
said: `Unlike other countries we are going to have a rather low price
of gas.’ He did not specify, however, what the price is going to be as
compared to the current price of $180 per 1,000 cubic meters.

Russia has also promised investment in the railway, but the issue will
be discussed only in December, apparently during the expected visit of
Russian President Vladimir Putin to Armenia.

Advisor to the President of Russia Igor Levitin said that Armenia’s
possible participation in the Customs Union was being discussed in
spite of the fact that the two countries do not share a common border.

However, Armenia’s Minister of Economy Tigran Davtyan said: `Joining
the Customs Union does not imply free trade with third countries that
are not in it, while Armenia has a free trade agreement, particularly
with neighboring Georgia.’

Davtyan also pointed to the fact that 60 percent of the state budget
of Armenia is formed at the state border, while with the entry to the
Customs Union the management of these sources of revenues will be
transferred to a supranational center. `And I’m not sure that all of
the solutions of this center will entirely meet the national interests
of Armenia,’ he added.

And Deputy Minister of Foreign Affairs of Armenia Shavarsh Kocharyan
made what all but amounted to a sensational statement. He said that
the controversial Russian immigration program, Compatriots, cannot be
implemented in Armenia against the country’s will.

The intergovernmental commission’s session resulted in the signing of
protocols in which the sides laid down their attitudes towards this

`The positions of the sides are clearly formulated in the protocols:
the Russian side is interested in the continuation of this program,
and the Armenian side is categorically against it,’ said Kocharyan.
According to him, the program cannot be continued in Armenia on the
basis of Armenia’s `clearly expressed position’.

Earlier, during a question-and-answer session in parliament Prime
Minister Tigran Sargsyan said that the format of the implementation of
the Russian program was unacceptable to the government of Armenia.

The goal of the program is to promote and organize voluntary
resettlement of former USSR `compatriots’ to Russia, a country
experiencing demographic problems. The realization of the scheme in
Armenia, however, also caused dissatisfaction as it is regarded as an
additional stimulus for out-migration, which is already high in

Apart from these concerns, the sides appeared to be content with the
development of economic ties.

During the eight months of the year, the trade turnover between
Armenia and Russia increased by 23 percent as compared to the same
period of 2011, amounting to $880 million. In addition, as the
Armenian prime minister said, imports from Russia to Armenia totaled
$640 million, showing a 17-percent rise, while exports of Armenian
goods and services to Russia made $168 million, registering a
50-percent increase. Work on the operation of free economic zones in
the territories belonging to the Russian company, Sitronics Ltd. RAO
Mars, and the Yerevan Scientific-Research Institute of Mathematical
Machines is in progress. Russian companies also control the basic
infrastructure of Armenia – the railway, power grids, the natural gas
system, the bulk of the communications market.

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