Author: Andranik Taslakhchian

Gyumri (Armenia) (AFP) – A kilometres-long caravan of trailers loaded with used cars meanders on a dusty road leading to a customs terminal in the Armenian city of Gyumri.

Russia’s invasion of Ukraine and unprecedented Western sanctions levied on Moscow have created a business opportunity for used car dealers like 31-year-old Yaroslav Kolchenko, who sips a coffee in the sun near the queue.

The US and the EU have banned the export of vehicles to Russia but cars can still be cleared through Armenia, and Kolchenko stands to gain.

“Today even wealthy Russians only have access to used American cars brought to Russia via Armenia,” he told AFP.

The native of Saint Petersburg described the arduous journey for vehicles coming to Russia in the wake of sanctions.

“Used, damaged or cheap cars are bought at online auctions in the United States,” he explained.

They are then “transported by sea to the Georgian port of Poti, repaired, transported to Armenia for customs clearance, and then taken to Russia by land via Georgia”.

The parallel exports are generally seen as a legal grey area and contradict the spirit of sanctions.

The new and lucrative route helps explain growing Ukrainian and Western concerns that Russia’s economic partners in the ex-Soviet Caucasus region or Central Asia are aiding Moscow bypass sanctions.

Armenia fell under the spotlight last year when President Vahagn Khachaturyan said Russia would “withstand sanctions” and vowed closer economic ties with “brotherly” Moscow.

The small and poor Caucasus country has a free trade agreement with Russia and clearing cars at Armenian customs is much cheaper compared to Russia.

This has helped Armenia emerge as a hub for re-exports from the United States to Russia after Western car dealers closed dealerships.

Kolchenko’s business partner, Andrei, who gave his first name only, said they have been in the business since the war started last February.

“We sold eight cars in April alone and plan to expand the business, which is pretty profitable,” he said.

By way of example, Andrei said one car he just purchased for $13,000 would be sold in Saint Petersburg for at least $23,000 with customs costs of spend around $5,000.

Those figures help explain why Armenia’s trade turnover with Russia skyrocketed since Moscow’s all-out invasion of Ukraine.

Official statistics show a 2.4-fold surge in exports that reached a record $2.4 billion last year.

Car re-exports grew last year by 170 percent, and more than 450,000 cars — mostly from the United States — were taken to Russia in the first quarter of 2023.

In March, the US departments of justice, treasury and commerce said in a joint report that Armenia was among the countries used as transhipment points to Russia.

The EU in June introduced new measures to its 11th sanctions package against Russia to clamp down on the evasion of restrictions, specifically closing loopholes on the re-exportation via third countries of sensitive technology like microchips.

Prime Minister Nikol Pashinyan told AFP this month that complying with Western sanctions without angering a key economic partner was a difficult balancing act.

“We’re in close contact and cooperation with the EU special envoy and the representative of the US to ensure that we act as a responsible member of the international community,” he said.

“At the official level, we do not have any objections or complaints from European or American partners, nor from Russia.”

Still Yaroslav said that “what is happening here in Gyumri shows that any sanctions could be evaded.”

“Of course, the Americans are not happy about it, and they will probably try to cause trouble but they will fail. You can’t isolate a country as big as Russia,” he said.

Standing nearby in the shadow of a wilted acacia tree, Andrei smiled in agreement.

“A they say, water will always find new channel if you block a river.”

Empty store shelves, people on the brink of starvation, and a region on the brink of yet another massive humanitarian crisis. Nagorno-Karabakh and its residents have once again been cut off from essential supplies after Azerbaijan suspends road traffic on the only road linking Armenia and Nagorno-Karabakh. For months, between December 2022 and April 2023, environmentalists from Azerbaijan — allegedly linked to the government — were blocking the Lachin Corridor, the only route connecting Armenia to Karabakh across the territory of Azerbaijan. Then on April 28, 2023, the so-called “eco-activists” suspended their blockade following the installation of an Azerbaijani border checkpoint on the corridor. However, since mid-June, no supplies have been allowed past the Azerbaijani checkpoint, and gas supplies have been once again cut off from the region. Azerbaijan has also blocked International Red Cross vehicles from entering the region, citing “contraband” prevention measures. On July 14, thousands of Armenians gathered in Stepanakert (Khankendi in Azerbaijani), Nagorno-Karabakh’s capital, and marched to the ICRC office in the city and the Russian peacekeeper base on the city’s outskirts, reported OC Media. 

Armenia and Azerbaijan may have fought a war two years ago and signed an agreement to end hostilities, but tensions between the two countries over the Karabakh region linger. When the blockade began in December, at first, the protesters demanded Armenia stop the illegal mining in Karabakh and prevent the transfer of minerals into the country. However, in the following days, the demands changed. According to reporting by Radio Liberty at the time, the protesters’ demands changed to “Baku establish control over the Lachin Corridor.”

The border checkpoint set up by Azerbaijan is viewed as a way to better facilitate the blockade of Nagorno Karabakh. Azerbaijan holds the upper hand in screening any vehicle traveling between Armenia and Nagorno Karabakh. Reports that residents were being screened by the Azerbaijani border troops emerged on May 1. According to reports, footage appeared to show Armenian vehicles passing through the checkpoint, with Azerbaijani border control officers inspecting their vehicles and documents.

“The people are from villages near the checkpoint under double blockade and were traveling with the support of peacekeepers, with guarantees of not being bothered,” wrote Artak Beglaryan, an adviser to the State Minister, on Twitter at the time when the checkpoint was set up.

The most recent blockade has left some 120,000 local Armenians cut off from supplies, causing severe shortages:

According to reporting by Eurasianet, since July 18, “public transportation services were cut to a bare minimum — only 2.4 percent of the pre-blockade volume.”

On July 15, leaders of Azerbaijan and Armenia met in Brussels in talks mediated by the European Council. This was the sixth such meeting that has taken place since the two nations fought a 44-day war in 2020. In June, their foreign ministers convened at a meeting in Washington, DC.

In Brussels, following the meeting between the leaders of both countries, the President of the Council of Europe, Charles Michel, said in a statement, “I commended the leaders for their strong commitment to the peace process and encouraged them to take further courageous steps to ensure decisive and irreversible progress on the normalization track.”

But while the leaders discussed some of the pressing points of reaching a final peace deal, there has been little sign of progress on the “most difficult issue — the fate of ethnic Armenians in Nagorno-Karabakh,” wrote Olesya Vartanyan, an analyst with the International Crisis Group, an independent organization that works to prevent wars and shape policies.

The Nagorno-Karabakh area has been under the control of its ethnic Armenian population as a self-declared state since a war fought in the early 1990s, which ended with a ceasefire and Armenian military victory in 1994. In the aftermath of the first war, a new, internationally unrecognized, de facto Nagorno-Karabakh Republic was established. Seven adjacent regions were occupied by the Armenian forces. As a result of that war, “more than a million people had been forced from their homes: Azerbaijanis fled Armenia, Nagorno-Karabakh, and the adjacent territories, while Armenians left homes in Azerbaijan,” according to the International Crisis Group. Following the second Karabakh war in 2020, Azerbaijan regained control over much of the previously occupied seven regions. Azerbaijan also captured one-third of Karabakh itself during the war. On November 10, 2020, Armenia and Azerbaijan signed a ceasefire agreement brokered by Russia.

According to Vartanyan, although significant progress was made in talks between the two nations in light of Armenian leadership’s “significant concessions” since the end of hostilities in 2020, the fate of ethnic Armenians in Nagorno-Karabakh remains unclear. “Armenia is insisting it includes special rights and ensures the security of Nagorno-Karabakh’s Armenian population. International mediators also want special measures due to decades of conflict and the recent 2020 war that claimed over 7,000 lives in just six weeks,” wrote the analyst.

Azerbaijan has yet to produce a document outlining its next steps regarding the ethnic Armenian population. Speaking to Reuters, Azerbaijan’s Foreign Minister Jeyhun Bayramov said guarantees for ethnic Armenians were not negotiable as this would amount to interfering with Azerbaijan’s internal politics. “This is an internal, sovereign issue. The Azerbaijan constitution and a number of international conventions to which Azerbaijan is party provide all the necessary conditions in order to guarantee the rights of this population,” said Bayramov.

In an interview with Politico, Tigran Grigoryan, a political analyst and the director of the Regional Center for Democracy and Security in Yerevan, said if faced with a choice, the local Armenian population will “choose to leave” rather than “accept [Azerbaijani] passports.”

A recent International Crisis Group report published in May 2023 explains how the new checkpoint is viewed among the local Nagorno Karabakh residents:

[Ethnic Armenians in Nagorno-Karabakh] worry that the checkpoint’s imposition represents a form or muscle flexing that could be the precursor to ethnic cleansing. This move unsettles the ethnic Armenians, who cite a violent history – in particular, Azerbaijani-orchestrated attacks on ethnic Armenians in the late 1980s – that leads them to equate Azerbaijani control with oppression. Indeed, both Azerbaijanis and Armenians harbor bitter memories of being forced to flee areas controlled by the other group in the wake of conflict and for fear of additional bloodshed.

The new round of blockade has given Azerbaijan an upper hand at the negotiation table over peace agreements as well. Speaking to Eurasianet, Zaur Shiriyev, an analyst with the International Crisis Group, “Simply put, Baku controls the Lachin road, meaning everything is in their hands, and while it remains a priority, it seems that there is no immediate urgency to reaching a peace agreement.”

Despite the repeated international calls to end the blockade, official Baku is reluctant to lift the blockade. Meanwhile, reports of deadly clashes continue. And prospects for peace remain hanging by a thread.