ARMENIA’S ROLE IN THE EURASIAN ECONOMIC UNION
Silk Road Reporters
Oct 17 2014
Published by John C. K. DalyOctober 17, 2014
Artwork by Mariam Marukian, winner of United Nations stamp contest
marking the International Day for the Eradication of Poverty.
On Oct. 10 Russian, Belarusian and Kazak Eurasian Economic Union (EEU)
leaders signed an agreement on Armenia’s accession to the organization
in Minsk. On May 29 Russia, Belarus and Kazakhstan signed the treaty
converting the current Eurasian Customs Union (ECU) into the EEU,
which will formally establish the EEU on Jan. 1, 2015.
The EEU is designed to increase economic cooperation among its member
countries, who under the terms of the treaty agree to guarantee the
free flow of goods, services, capital and labor and to implement
a coordinated policy in the energy, industrial, agricultural and
transport sectors. The three EEU member states account for 85 percent
of the GDP of the Commonwealth of Independent States (CIS), with a
combined GDP in 2013 of $2.43 trillion.
Armenia’s President Serzh Sargsyan has no doubt that his country’s
accession to the EEU will launch a new phase of integration in
Eurasia, telling reporters, “We will do everything possible for
Armenia, with its expertise and competitive advantages, including
by continuing institutional and structural reforms, to contribute to
the strengthening of the Eurasian space.”
On Oct. 2 Armenia Public Television reported that the government
approved the agreement on the nation joining the EEU during a session
held in the capital Erevan, the same day that it approved the EEU
draft treaty of accession. In presenting the draft accession document
Deputy Finance Minister Suren Karayan said, “Armenia will become a
full member of the EEU at the moment the treaty takes effect. The
treaty lists commodities to which special import rates, differing
from unified customs tariffs, will apply on the part of Armenia in
the transitional period.”
The following day in Moscow Russian President Vladimir Putin said
before a government meeting, “Today I signed a federal law on the
ratification of the treaty on the EEU,” hailing the signing as “a
significant stage” in the joint work on integration with Russia’s
closest partners and allies, Belarus and Kazakhstan. The same day
Armenian Prime Minister Hovik Abrahamyan told a press conference before
the executive meeting of the Republican Party of Armenia that the
country would sign an accession agreement to join the EEU in Minsk,
commenting, “There is not much time till Oct. 10. I am sure that
Armenia will sign the contract, and we will enter the Eurasian united
economic space,” adding that he foresaw no obstacles for entry into
the EEU because the country fulfilled all the obligatory prerequisites.
The benefits of the EEU for smaller member states seem clear, as
membership in the bloc would give local producers easier access to a
far larger and more lucrative market than their own. Armenia’s economy
is already intertwined with its fellow EEU members: during the period
Jan.-Aug., Armenian trade with Belarus, Kazakhstan and Russia was worth
$839 million, representing 23.1 percent of the nation’s foreign trade.
Energy figures prominently in the EEU’s future agenda, as the three
founding member states have 20 percent of the world’s gas reserves
and 15 percent of oil reserves. Though the three states only make up
2.5 percent of the world’s population, they cover 15 percent of the
total land area. A common energy market concept is being developed
which should be passed by mid-2015 to create a single energy market
and merge EEU members’ energy systems by 2016, with the ultimate goal
of establishing a single hydrocarbon market and single gas transport
system accessible to all EEU members by 2025.
While many analysts speculate that the EEU, economically dominated by
Russia, may become a tool of Russian economic and political policy,
Armenia is already showing signs of daylight in its accession: on Aug.
15 Armenian First Deputy Minister of Economy Garegin Melkonyan stated
that even after joining the EEU, his country would not follow Russia’s
lead in banning imports of agricultural products, feedstock and food
from U.S. and EU states over their sanctions policies towards Russia,
telling the media, “The restrictions announced by Russia can only
be used in Russia’s territory. Under the relevant provisions of the
Agreement on Eurasian Economic Union, the sides have the right to
take some protective and restricting measures.”
Armenia’s EEU accession will present some logistical issues. Sargsyan
said at the session of the Supreme Eurasian Economic Council in
Minsk, “The membership of Armenia has its own specificity which is
the absence of common borders with the rest of the Eurasian Economic
Union. However, we believe that this would not hamper the integration
of Armenia into the single system of regulation, transportation,
energy, telecommunications and finance in our common economic area. We
are well aware of the special responsibilities that we assume by
joining the treaty.”
Regarding possible Russian intentions to inject political overtones
into the EEU, on June 17, Kazakh first deputy prime minister and
a top negotiator in the EEU accession process Bakytzhan Sagintayev
reiterated that his country was “forming a purely economic union. It is
a pragmatic means to get benefits. We don’t meddle into what Russia
is doing politically, and they cannot tell us what foreign policy
to pursue.” Kazakh President Nursultan Nazarbayev noted, “The Union
is first and foremost economic and does not touch upon the issues
such as independence and political sovereignty of the members of the
integration process.”
Putin certainly sees the EEU as expanding; following the May 29
signing ceremony he told reporters, “It is no accident that already
the largest global economic players are showing interest, most direct
and immediate, towards this union. Wherever I go, whoever I talk to,
everyone asks: how to establish relations with the future Eurasian
Union.”
As for the future, on Oct. 6 in Novo-Ogariovo near Moscow Russian
First Deputy Prime Minister Igor Shuvalov said that a special group
is also analyzing Kyrgyzstan’s possible accession to the EEU, and
there is a road map for drafting a treaty on Kyrgyzstan’s joining
the EEU but added, “This work will take some time.” Further afield,
Uzbekistan and Tajikistan may join later, and significantly, India,
Israel, New Zealand, Turkey and Vietnam are among the countries that
have expressed a desire to have trade agreements with the EEU.
Whatever the eventual form future EEU policies will take, Armenia,
as the most isolated and poorest of the three post-Soviet Caucasian
states, is being presented with an opportunity to ally itself with
two of Eurasia’s stronger economies, Russia and Kazakhstan. If that
integration comes with significant political baggage remains to
be seen.
Dr. John C. K. Daly is a non-resident Fellow at the Johns Hopkins
Central Asia Caucasus Institute in Washington DC.