168: They threaten

Armenian-Russian relations are not experiencing their best times. While in Russia they started talking about Armenia’s “political divorce” from the EAEU, the authorities of Armenia advance the thesis that they do not have an agenda to leave the EAEU at the moment.

In fact, the authorities do not have an agenda to leave the EAEU, but at this moment, even in the case of the greatest desire, they cannot have such an agenda, because it would be suicide for Armenia. Armenia is not at all ready to leave the EAEU. Firstly, that they are not waiting for him anywhere else, and secondly, they have not created alternative opportunities to at least somewhat compensate for the losses of leaving the EAEU. That’s why at the moment they prefer to stay in EAEU, from which Armenia receives economic benefits, although the political orientations of the government are clearly going in a different direction.

At this moment, the desire of the Armenian authorities to stay in the EAEU is completely natural. Other than that, with such political orientations, how willing are they to tolerate the presence of Armenia there?

Naturally, many people will not like what they are doing. Therefore, they may not even wait for the decision of the Armenian authorities and act on their own initiative. Although the Armenian authorities hope that EAEU regulations allow them to block that process.

“We are a full member of the EAEU with the rights and responsibilities arising from it, and perhaps such a conversation does not exist on our agenda. All decisions in EAEU are by consensus… If such a question is on our agenda, Armenia will decide how to vote. But if Armenia doesn’t vote, have you thought about what will happen in that case…” says Alen Simonyan, without opening the brackets, but indirectly threatening to paralyze the EAEU works.

Legally, there may be such an opportunity, but in practice, what will Armenia gain from it? There will always be ways to get out of such emergency situations. But even if they are not found, it is enough to apply some restrictions so that Armenia’s economy is deprived of the opportunities provided by EAEU. We have witnessed such situations many times with their severe consequences. In the case of undesirable developments, these consequences can be much more painful, taking into account how comprehensive the connections of the Armenian economy with the Russian market are. In recent years, almost nothing has been done to mitigate the effects of these ties, except for talking about the diversification of the economy and exports. The same is happening today.

From the outside, they create the impression that the geography of Armenia’s exports is moving from the EAEU, particularly from Russia, to the EU markets. But that is far from reality. It is true that exports to Russia continued to decrease this year, but the main reason for the decrease is that re-exports to the Russian market via Armenia decreased. It is known that almost half of exports in recent years were re-exports, which are gradually decreasing.

After the settlement of the Russian-Ukrainian conflict, they will be reduced to a minimum. But this does not mean that after that the Russian market will lose its significance for the Armenian economy. In terms of the export of Armenian goods, the role of that market has increased even more in recent years. And the fact that, unlike the Russian market, there is a sharp increase in exports to the EU at the beginning of the year, it does not mean that Armenian products are transferred from the Russian market to the European markets.

The EU export increased mainly due to the export of one type of product. You probably understood what type of product we are talking about. The type of product, the export of which has never had problems in terms of export markets.

We are talking about raw materials, at the expense of which the growth of EU exports took place.

In the first quarter of this year, exports from Armenia increased by 4.5 percent. According to official data, last year it was 1 billion 683 million dollars, this year it was 1 billion 760 million dollars. This growth occurred exclusively at the expense of the export of mineral products.

Almost twice as many mineral products were exported from Armenia than last year. In monetary terms, it was 434 million dollars.

Compared to the previous year, the export of raw materials increased by 213 million dollars. Of course, it was affected by both the increase in export volume and the price increase. But that is what has become the only reason for the growth of exports. All other sectors of the economy together have not increased the export potential at all, which gives cause for serious thought.

The export of raw materials alone increased by 213 million dollars, and the total export by 77 million. This means that the total export of all other goods has decreased. And it is only the doubling of the export of mineral raw materials that has led to an increase in the volume of exports, including exports to EU countries.

Half of those 213 million dollars more exports of raw materials went to the EU. But this does not mean at all that a real diversification of exports has taken place, or that the products of Armenian production have moved from the Russian and EAEU markets to the EU markets. As in the past, Russia has been and continues to be the main market for the export of Armenian products, especially agricultural and processed products. Under these conditions, losing that market, even partially, will break the back of both agriculture and the economy in general, regardless of whether the separation from the EAEU will be in the form of a civilized or uncivilized divorce.

First of all, the “proud” citizen of Armenia, whose incomes are barely enough to cover their own needs, will suffer from this. Tomorrow, if it turns out that the geopolitical contradictions are transferred to the economy, and we lose not only one of the main markets for the export of Armenian products, but also lose preferential imports of a number of primary products, the ordinary “proud” citizen and the socially insecure class of society will bear the burden.

HAKOB KOCHARYAN

—