Opinion: ‘Russia ‘blackmails’ Armenia with threat of gas price hikes’

Statements by Russian President Vladimir Putin during a recent meeting with Armenian Prime Minister Nikol Pashinyan have been interpreted by Armenia’s expert community as a threat.

Putin said Moscow remains calm about Armenia’s desire to develop ties with the EU.
He also said Yerevan cannot expect to be a member of the European Union. It also cannot remain in the Russia-led Eurasian Economic Union. He also stated that Yerevan cannot expect to be a member of both the European Union and the Russia-led Eurasian Economic Union. He stressed that Armenia’s economy is growing steadily. He added that exports to EAEU countries have increased tenfold in recent years.

Putin also addressed energy issues. He warned that gas prices in Europe exceed $600 per 1,000 cubic metres. He added that Russia sells gas to Armenia for $177.5. He said this difference is significant.

“It is your decision in the end — the decision of your team and your experts — where, with whom, and on what basis to work,” Putin said.

The day after the meeting, Russian Deputy Prime Minister Alexei Overchuk also spoke on the issue. He said Armenian counterparts had “come close to a point after which we will have to structure our economic relations with this country differently”.

Armenian authorities say gas prices will not change. They argue that otherwise Armenia’s participation in the EAEU would lose its meaning.

They also do not rule out that, if gas prices change, Yerevan could leave Moscow-led structures. This includes both the Eurasian Economic Union and the CSTO military alliance.

At the same time, Armenian analysts say Russia would face losses if it took drastic steps against Armenia. They add that Yerevan could turn to alternative options, such as importing gas from Kazakhstan.

Reactions from Armenian authorities, as well as expert commentary, follow.

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‘If gas prices change, Armenia will leave the EAEU and CSTO‘

Armenian journalists asked representatives of the ruling party whether Moscow had adopted an ultimatum-style tone towards Yerevan.

In response, National Assembly Speaker Alen Simonyan said Prime Minister Nikol Pashinyan spoke with Putin “from the position of an independent, sovereign state”. He added that discussions about prices for Russian goods and gas are not new and have continued for many years.

Simonyan said that if a decision is made to change prices, Armenia will decide to leave Russia-led integration blocs — the CSTO and the EAEU.

However, he does not believe the situation will reach that point. He also said that after their public statements, the two leaders held a “very good” conversation:

“We discussed this, and I will repeat: we have done nothing against Russia, we are doing nothing, and we are not going to do anything. At the same time, we have defended and will continue to defend Armenia’s interests.”

Economy Minister Gevorg Papoyan expressed confidence that gas prices will not change, as partners need Armenia to remain within Russian-led structures:

“Partners need Armenia to remain both in the CSTO and in the EAEU. And if Armenia is not meant to benefit, then why should it stay in this union? [In response] a process will begin in another union — and it will accelerate.”

Commentary

Political analyst Ruben Meghrabyan said:

“The conversation between Pashinyan and Putin showed that Russia views gas as one of its levers of pressure on Armenia. We remember how Serzh Sargsyan was ‘brought in’, and as a result Armenia became a victim of trafficking into the so-called EAEU bloc — a structure we still cannot free ourselves from. Gas was one of the reasons back then as well.

Armenia must resist this. The idea of transporting Kazakh gas to Armenia and Europe via Azerbaijan is quite promising.

This would make gas even cheaper for Armenia, since consumption in the country is not that high.

Armenia’s energy system does not depend heavily on gas. Gas is mainly used for fuelling cars, heating homes and cooking.

And now Putin has decided to blackmail us with gas, comparing it to the current price of 600 euros in Europe, amid a sharp market surge.

What should Armenia do? It must resist all of this. There should be no retreat in connection with this new Russian package of measures from 3 September [referring to the events of 3 September 2013], which Russia is now promoting.”

Civil society representative Daniel Ioannisyan said:

“Some groups in Armenia try to create the impression that Armenia lives off Russia like a parasite, and that if we fail to please the Kremlin, everything will collapse. That is not true. It is a false narrative promoted on Moscow’s instructions.

The reality is that if Russia blocks imports of Armenian goods or raises gas prices for us, Russia will also suffer.

If Russia takes such drastic steps, we could, first, leave the CSTO military alliance and remove the Russian military base from Gyumri. That would deal a major reputational blow to Russia. The whole world would see how much the former superpower has weakened.

We could also leave the EAEU. This would close a channel for importing certain Western goods through Armenia that are important for Russia’s economy.

It is important to note that customs duties paid to Armenia for goods imported through the country do not remain here.We transfer about 98.7% of them to other EAEU member states. Yes, they would lose that money as well.

In addition, the Russian economy and consumers would lose access to affordable food products from Armenia, which would further worsen rising prices in Russia. Not to mention ‘smaller’ steps such as shutting down Russian TV channels or nationalising railways.

If Russia significantly raises gas prices for us, we can buy gas from other countries. Russia would lose revenue from gas sales, just as it has already lost major income from gas exports to Europe.

I am not saying these scenarios are favourable or beneficial for us. But they are not beneficial for Russia either — and they are not masochists.”