Russia has threatened to revoke preferential supply agreements with Armenia covering gas, oil products and rough diamonds in response to Yerevan’s increasingly close ties with the European Union, the Russian newspaper Kommersant reported on Wednesday.

The report comes just weeks ahead of parliamentary elections in Armenia on June 7. The South Caucasus country has traditionally been a Moscow ally and was part of the Soviet Union until 1991.

“The ongoing practical steps to deepen Armenia’s interaction with the European Union and the Armenian government’s declared aspiration to join the EU threaten the preservation and development of the fundamentally high level of Russian-Armenian trade, economic, and investment cooperation,” the newspaper reported, citing a letter from Russia’s Energy Ministry to Armenia’s Infrastructure Ministry.

According to the report, the letter warned that existing contracts could be terminated.

While the Armenian government denied the contents of the letter, Russian Foreign Ministry spokeswoman Maria Zakharova confirmed that such a document existed.

Kremlin spokesman Dmitry Peskov said discounts granted to Armenia were at Russia’s expense and questioned whether Armenia could expect similar benefits from eventual EU membership.

Under a 2013 agreement, Armenia receives key raw materials from Russia free of tariffs and remains heavily dependent on Russian gas supplies.

Prime Minister Nikol Pashinyan has said Armenia could increase gas imports from Iran if necessary, although the capacity of the existing pipeline is limited.

Russia also recently suspended imports of several Armenian food products, officially citing quality concerns.

Pashinyan is facing mounting domestic pressure following Armenia’s defeat in the conflict with neighbouring Azerbaijan over Nagorno-Karabakh, which triggered the mass displacement of Armenians from the region in 2023

Armenia recently pledged to work more closely with the EU on security, defence, energy, transport and the digital economy at a recent summit in Yerevan.

Pashinyan and Russian President Vladimir Putin clashed recently over political freedoms, with Putin alleging that Armenia’s pro-Russian opposition was being suppressed, while Pashinyan responded that no one in Armenia was imprisoned for their political views.