Forecast for Armenia: The report of the EAEU intergovernmental council

On October 20, the Eurasian Intergovernmental Council (EEU body consisting of the prime ministers of the member states) published report, which was agreed upon by Russia, Belarus, Kazakhstan and Kyrgyzstan.

The report is dedicated to the possible consequences that await ArmeniaA:In case of suspension of the contract on TM, as well as cancellation of privileges provided in the association. The report was prepared in fulfillment of the joint statement of the leaders of the aforementioned quartet of EAEU countries regarding the actions aimed at Armenia’s accession to the European Union.

To remind, at the EAEU summit held in Astana on May 29, the President of Russia agreed on the statement together with the leaders of Belarus, Kazakhstan and Kyrgyzstan. In it, the Quartet expressed concern over “the preparation of the Republic of Armenia’s accession to the European Union, as well as the need to prevent harm to the Union’s member states.” regarding“, because neither Moscow nor other EAEU members are going to sponsor Armenia’s movement towards Europe.

In this regard, they demanded from the leadership of Armenia to decide on the future direction of integration: “to hold a nationwide referendum on joining the European Union in the shortest possible time in the Republic of Armenia or in the futureA:Regarding being part of the Ministry of Internal Affairs”. It was also decided that by December 2026, the participants of the Eurasian Intergovernmental Council will assess the risks of possible suspension of Armenia’s membership in the Union. The quartet’s initiative is aimed at the need to hold a referendum in Armenia to that, for Yerevan to officially and legitimately orient itself on its course.

The point is that according to the consolidated opinion of the four EAEU members reflected in the report, “the actions of the Republic of Armenia, which are aimed at EU membership, create many economic risks, both for the activities of the EAEU as a whole, and for the economies of individual participating states.” They also have the potential to cause direct material damage to producers of goods and services working within the Eurasian integration union.

According to the authors of the document, if Yerevan begins to fulfill the requirements for joining the European Union, it will lead to the violation of the obligations undertaken to the current partners and will violate their rights. The integration of the two unions is based on the formation of internal markets according to the rules that are common to all participants. However, supranational standards in EAEU and EU are very different. Meanwhile Deputy Prime Minister of the Russian Federation Alexey Overchuk announced, that Work is already underway in Armenia to move to EU standards, and if the country starts managing technical regulations, “it will already create certain threats for EAEU”.

Armenia’s transition to European standards may undermine the integrity of the Union’s unified customs territory. If one of the countries starts working with the rules that differ from the general ones, the other participants will have to re-check how far the goods coming to Armenia from third countries legally enter the territory of the Union. As a result, goods in the general market will become more expensive, and producers within the EAEU will lose a part of their competitive advantages and income.

Head of the Eurasian Analytical Club, political scientist Nikita Mendkovich կարծիքով՝ EAEU member states should make a decision that will exclude ambiguity, such as the Armenian one. “Otherwise, any country of the Customs Union can declare: I am with you, and here I am opening another window to another trade area and will actually live at the expense of smuggling schemes, moving duty-free goods from one customs block to another.” The expert noted that in the presence of such a “window”, the union will lose all meaning, and none of the member states is interested in it, except for the alleged violator.

This the legal conflict is most clearly manifested in the field of customs legislation and in ensuring the safety requirements of goods entering the domestic market. Moreover, the requirements in the EAEU are often stricter than in the EU. For example, in the EAEU, there are stricter permissible levels for the residual amount of antibiotics (ARL). In the Eurasian community, it is not allowed to produce food for children, nursing and pregnant women from raw materials containing GMOs. The ban also applies to the production of toys from recycled materials, while it is allowed in the EU.

so the problem has matured, and the publication of the mentioned report was not a surprise, as the Armenian leadership tries to present. In the report, the advantages that Armenia enjoys and the losses that await it in the event of leaving the union are clearly presented in numbers. Armenia has been warned about this many times, but now these warnings have received clearer wording.

The consequences will reduce export potential, affect agriculture, industry and many other sectors. The single market of goods, services, capital and labor resources for Armenia will cease to function. The free trade regime with the partners of the Union – Iran, Vietnam, Serbia, Mongolia, and the UAE – will cease to operate in relation to Armenia.

The report considers the scenario of an increase in the price of Russian gas for the Armenian side, from the current 177.5 dollars to 300 dollars per 1000 cubic meters, in case of suspension of Armenia’s membership in the EAEU. In that case, Armenia’s gas import will increase by 69% in terms of value, from 389 million dollars to 657.5 million dollars. GDP decline will be 15.6%, inflation – 14.9%, consumption reduction – 14.6%, trade turnover with the “five” partners – 55.6%, reduction of money transfers – 2.1 billion dollar. Basically, it will affect all spheres of economic and social life.

The figures given reflect the possible scenario, not the changes that have already taken place. According to a number of experts, the estimates of possible economic losses presented in the document may even be excessive to be optimistic. The real consequences will depend on the future decisions of Yerevan and the conditions of economic cooperation.

EAEU members claim that the historic choice that will determine the future fate of Armenia should be made not by the current leadership, which enjoys the support of less than half of the population, but by all its citizens, publicly and democratically. Then it will be the responsible choice of the whole people and their own responsibility.

If Yerevan avoids the referendum and makes a voluntary decision to change the political-economic orientation of the country, EA:The MoU will have sufficient grounds to suspend/freeze Armenia’s participation in the unification. A procedure for which there is no direct mechanism within the EAEU may be introduced as a countermeasure: “The main principles of the activity of the Union” for non-fulfillment of obligations under Article 3 and justified by general international law, including the 1969 Vienna Convention on International Treaties of right about. 

The report specifically emphasizes that Russia, Belarus, Kazakhstan and Kyrgyzstan, respecting the right of the Armenian people to independently decide whether or not to participate in this or that union, “are not interested in the withdrawal of the Republic of Armenia from the Eurasian Economic Union.” Moreover, Yerevan is reminded that, in accordance with the universally recognized norms and principles of international law, the member states have the right to temporarily suspend theA:The operation of the Treaty on Trade Union Relations with Armenia, and this decision can be valid until the holding of a referendum in that country. 

Judging by the inadequate reaction of the Armenian leadership, the mentioned report “has reached the point”.

Defending its position, Pashinyan’s team builds arguments around the thesis of the supremacy of sovereignty over economic interest. “Our main focus is on the consistent development of Armenia, the protection of our independence and sovereignty.” comments the prime minister.

Foreign Minister Ararat Mirzoyan emphasizes that “trade, welfare of citizens, economic interests… are important for us. But the most important thing is the sovereignty and independence of Armenia.” Economy Minister Gevorg Papoyan claims that the estimates of the direct negative impact of RA’s withdrawal from the Union are exaggerated in the report by about two times. In other words: unable to publicly ignore the forecast numbers, the authorities are trying to discredit them as politically motivated.

The words about sovereignty sound especially strange when trying to join the EU, because achieving the goal would mean giving up independent politics and economy. All areas: trade, economic regulation, antimonopoly activity, public procurement, technical regulations, sanitary and veterinary norms, will be dictated by Brussels. In other words, Armenia will be deprived of its sovereignty to a much greater extent, and the Armenian government will be deprived of its decision-making powers in almost all areas of trade and economic regulation.

Moreover, the European Union is not so much interested in Armenia’s membership in the union and not so much in its energy or military-political security, as in the expulsion of Russia from the region. The European representatives have stated that absolutely unequivocally, and there is nothing new here.

The main problem is not how accurate the forecasts presented in the EAEU report are, but the fact that the Armenian authorities have not presented a convincing and comprehensive assessment to the public regarding the economic consequences of a possible exit from the union. The future scenario will depend not on the accuracy of the experts’ statistical calculations, but on how fast and tangible the economic costs will be felt by the Armenian society and, most importantly, whether it will be ready to pay for the political choice of the current government.

The country’s prime minister suggests starting not from economic analysis, but “We will live and see…” from the principle. He to the people assuresthat even the increase in the price of gas will not lead to an “apocalypse” in the economy of Armenia.

It is noteworthy that even the terminology of discrediting objective economic forecasts coincides in both cases. One can recall the situation with Ukraine in 2013, when the country’s political elites actively promoted the signing of an agreement on a free trade zone with the EU, pretending to have forgotten that their country was already in the CIS free trade zone.

At that time, Sergey Glazev (in 2013 he was an adviser to the President of the Russian Federation), who was born in Zaporozhye, was called a “rider of the Euroapocalypse” in the pro-Western Ukrainian press. With that, the advocates of the “European choice” tried to discredit the analysis of the disastrous consequences of concluding the aforementioned agreement with a group of Russian experts for Ukraine. Unfortunately, quite quickly Glazev’s prediction was confirmed.

“It should be noted that the restrictions applied to Armenia neither politically nor economically led to the consequences that want to were certain circles in Armenia and outside Armenia. However, head of the “Alternative” Armenian research center, doctor of economics, professor Tatul Manaseryan contradicts this.

“From an economic point of view, according to estimates “In just a few months, the Republic of Armenia lost more than one billion dollars only because of the reduction in the export of agricultural products, flowers, fish and similar products.” Similar rhetoric of the Prime Minister of Armenia, the official representative of the Russian Foreign Ministry M. V. of Zakharova in the opinion “is built on the neglect of economic realities, moreover, on the neglect of assessments of the course of membership of the European Union, to the detriment of traditional Russian-Armenian ties, which are voiced by the representatives of the economic bloc of Armenia.”

Simultaneously with the attempts to discredit the content of the report, the Armenian leadership is trying to convince the civil society that Armenia cannot leave the EAEU. 

“We conscientiously fulfill and are fulfilling our obligations”, asserts RA Foreign Minister Ararat Mirzoyan, ignoring the specific examples of violations cited in the report, as well as the very principle of economic integration, which implies the agreed policy of all member states towards third countries.

Nobody is really going to exclude Armenia from EAEU. However, there are grounds in international law to terminate E for Armenia by a collegial decisionA:Operation of the TM agreement. 

According to Nikolay Silaev, a leading researcher at the Institute of International Studies of the Russian MFA MGIMO, the EAEU report really says that there is no clause in the treaty that would describe the suspension of the treaty against one of the countries, but at the same time there is a reference to the Vienna Convention on the Law of International Treaties. And in this case, the participants will rely on that very convention։

“The convention states that agreements must be respected. Armenia does not observe the EAEU agreement, and this is proven in the report. Therefore, there are conditions for suspending the operation of the treaty with respect to Armenia. The question was what legal form they would find to resolve the suspension. Here it was found. Moreover, no one is burning with desire, no one wants that decision to be made.” emphasized the political scientist.

ALEXANDER ANANEV:

Retired senior adviser to the Russian Foreign Ministry

interaffairs.ru

Translation: Zhanna Avetisyan

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