Armenia’s decision (03.09.2013) to join the Russian sponsored Customs Union (CU) and its perspective evolution, the Eurasian Economic Union (EEU), had the effect of a thunderclap in European politics. The decision left the European Union in disarray. In the framework of the Eastern Partnership programme (EaP), this year Brussels has been engaged in intense negotiations to foster closer relations with the former Soviet Republics of East Europe and the Caucasus.

Among the three Caucasian nations, Armenia was at times indicated in Brussels as the '"model student" of the EU plan. Throughout the summer, Yerevan continued consultations with the EU to define the essential terms of an Association Agreement and to establish a Deep and Comprehensive Free Trade Area (DCFTA). Together with Ukraine, Armenia was expected to sign these documents at the EaP Summit in Vilnius in November 20013, so that to redefine and put on new basis trade and other relations with the EU by way of closer institutional ties. 

All of this suddenly evaporated after a meeting between Armenian President Serzh Sarksyan and Vladimir Putin. 

Bruxelles has seen in Sarksyan’s u-turn towards alternative integration with Russia the result of coercion from Moscow’s side. Indeed, the Kremlin has increasingly expressed dissatisfaction over Armenian “Westward drift”, also known as “policy of complementarity”. The recourse to the consistent tactic of boycotting the neighbours to gain political leverage has been seen in the sharp increase in the price charged to Armenia for Russian natural gas last June – whose effect on the cost of electricity and public transport had been felt by the mass of Armenian population causing public indignation. 

However, although present this perspective is far from explaining entirely Yerevan’s choice. Indeed such a reading of the event risks to be too much simplistic as it fails to grasp the enormity of the predicament pending on Armenian choice. 

Since the return of Putin to the Presidency his launch of the new process of Eurasian integration, Armenia and the other post-Soviet republics caught in the Euro-Russian “shared neighbourhood” are torn in a major dilemma. From one side, the gravitation towards the EU and its standards appears to large portions of the citizens of Post-Soviet countries as the principal way to overcome the corruption and the absence of rule of law that are still hindering their development after twenty years of "transition". 

At the same time, in the same countries there are many actors who see in the Eurasian integration much less Moscow’s leadership ambitions than an effort to overcome the dilapidation of the real sector of their economies. Only by this way, the argument goes, industrial ties disrupted by the Soviet breakdown may be restored allowing development to restart on sound basis.

This argument is particularly relevant for Yerevan, whose economy is among the weakest in the ex-USSR. Russia remains the largest trade and economic partner of Armenia and its economic conglomerates control the principal assets in it. At his fateful meeting with Sarksyan, Vladimir Putin announced up to 15 billion RUB (approx. 340.530.000 EUR) investment in the development of the Armenian railway network and the extension of the bilateral cooperation in the nuclear field. More of this, maintaining open channels with Moscow is for Armenia a vital issue, given the importance of the migration flows that bind the two sides – in chief the remittances from the RF, something like one billion dollar, an essential part, up to one tenth, of Armenian State budget.

Against this background, the potential of European material support to Armenian developments looks modest. Moreover, much of its perspectives in the real economy sector of the South Caucasus are related to the development of transport and energy infrastructure networks, most of whose bypass the territory of Armenia. 

Yerevan’s reckon is further complicated by its lack of common borders and territorial contiguity with both blocs.

But much more important are the strategic considerations behind the Armenian decision to join the Eurasian process. Armenia is still entangled after more than two decades in a confrontation with Azerbaijan over the control of separatist Nagorno Karabakh. The potential for a resumption of armed hostility has severely increased in the last months. Facing this situation, Armenia fully rely on its military alliance with Russia which assure the equipment of its troops and helps to maintain a relative military balance by way of the troops deployed on its territory at the border with Azerbaijan’s main ally, Turkey. It is true that Moscow is playing on both sides, also as an arm dealer, in order to preserve its role of regional arbiter, but it is not less true that Yerevan does not have and will not have any guarantors of its physical security other than Russia.  

It should also be observed that, as in other post-Soviet countries involved in the Eurasian integration, the process has become a weighty factor in the definition of the internal political situation. This is a factor that the Armenian government should consider carefully. Russian influence in the country is so great to put an hypothec on its national sovereignty. As observed, Sarksyan decision to reverse the national policy on engagement with the EU, has it emerged abruptly, and apparently without consulting other leaders, has stirred uneasiness in Yerevan. There the opposition has immediately took the street questioning the legitimacy of the current leadership accusing it of succumbing to the Russian diktat.

Confronted with these accusations, the Armenian leadership has tried to follow the dual-track foreign policy of complementarity. Even after September, the Armenian diplomacy has reiterated its willingness to continue the cooperation with the EU "in all possible directions." According to the Foreign Minister Edward Nalbandian, strategic concern aside, the decision to join the CU stemmed from the closer similarity of its requirements and tariff structures to the national ones. However, Yerevan considers that the trade dimension should be separated from the political one so that the CU will not “preclude our dialogue with the European structures” nor influence the pace of economic reforms in Armenia. The EU High Representative Ashton replied recently to Nalbandian that the EU remains staunch in deepening relations «in all areas that are compatible with Armenia's recently announced new commitments».

Overall, even if the feeling of the inevitability of the axis with Moscow is strong as ever among the majority of Armenians, the games are far from being solved. In the years to come, Armenia and the other countries of the region will remain the theatre of a confrontation between Moscow and the West to define their orientation.

Such a confrontation is no help for the huge problems that the Caucasus is facing. As winds of war continue to loom around the Caucasian peaks, the common interest in preventing the potential of conflict of the region to escalate requires from both sides a major effort to stress complementarities more than incompatibilities between the CU and Association with the EU. This is even more actual considering that to pursue a coherent strategy of national modernization is a vital necessity not only for the countries of the EaP but for the Russian Federation as well.

In this perspective, Armenia will remain a benchmark of the capacity of the EU-EEU relations to evolve on the rails of a civilised articulation of their legitimate interests taking into account the needs of the countries of the EaP. 

VAI AL DOSSIER