Institute for War and Peace Reporting | Giving Voice, Driving Change

Armenia Wants Best of Both Worlds

Moscow ally says it wants to engage with Brussels, too – and that there’s no contradiction there.
By Arshaluis Mghdesyan
  • Armenian president Serzh Sargsyan (left) talks to European Council president Donald Tusk in Brussels, March 19, 2015. (Photo: Armenian  president's official website)
    Armenian president Serzh Sargsyan (left) talks to European Council president Donald Tusk in Brussels, March 19, 2015. (Photo: Armenian president's official website)

Six months ago, it looked like Armenia had made a final, definitive choice to align itself with Russia rather than the European Union.

But now the government in Yerevan seems to be reaching out to Brussels again and seeking something like the kind of Association Agreement that it abandoned nearly two years ago – and officials insist that Moscow is comfortable with this.

Armenia’s renewed interest in closer relations with the European Union was reflected by President Serzh Sargsyan’s presence at the May 20-21 European Partnership summit in Riga, also attended by the leaders of other former Soviet states like Ukraine, Georgia and Moldova.

This followed a meeting Sargsyan held in March with the European neighbourhood policy and enlargement commissioner, Johannes Hahn. After that meeting in Yerevan, Hahn said the EU and Armenia had completed a joint “scoping exercise” to identify potential areas for cooperation. He said the EU was working towards a deal that would include “special terms for cooperation”.

When Sargsyan announced that Armenia wanted to join the Moscow-led Customs Union in September 2013, EU officials made it clear the trade terms and tariffs of the two blocs were incompatible. After years of work, the draft Association Agreement with the EU was thus shelved. In January 2015, Armenia joined the Eurasian Economic Union, a bloc with a broader remit established last year, incorporating the old Customs Union. Apart from Armenia, the Eurasian union’s members are Russia, Belarus, Kazakstan, and since May, Kyrgyzstan. (See Armenia Seeks New Deal With EU.)

In an increasingly polarised region where Russia has been seeking support from its neighbours on Ukraine and Western sanctions, Armenia – historically a close ally of Moscow and now part of its Eurasian project – would be the last country one would expect to waver.

But Armenian foreign policy officials say there is no discrepancy, and that Moscow is fully aware of what and is quite content with the policy. Many quote Deputy Foreign Minister Karen Nazaryan, who told parliament recently that “we have held discussions with the Russians about Armenia cooperating with European institutions. The Russians have no negative views on this.”

“Our relations with the EU are not directed against other countries,” Nazaryan added.

For its part, the EU seems to have accepted that some European Partnership countries are keener than others to build strong relationships. Now the talk is of tailoring what was once a standardised approach to fit the needs and wishes of each state. The final declaration from the Riga summit said that each participating state had a right to “choose the level of ambition and goals to which it aspires in its relations with the European Union”.

“The idea of a differentiated approach was there in negotiations even before the Riga summit,” Poland’s ambassador to Armenia, Jerzy Marek Nowakowski, told IWPR. “If a given partner cannot fully engage in the process for some reason or another, then it can cooperate in just some areas of EU engagement.”

Foreign Minister Edward Nalbandyan says the areas of cooperation now under discussion include education, science, research, people-to-people contacts, and preferential trade terms. Speaking at an “informal dialogue” of European Partnership ministers in Minsk on June 29, he said Armenia wanted to be part of the EU’s COSME programme, aimed at boosting small and medium-sized businesses, and Horizon 2020, an 80 billion euro research and innovation fund.

Deputy Economy Minister Garegin Melkonyan said recently that the final agreement would consist of sections of the Partnership Agreement finalised in 2013, with other parts such as customs and free-trade arrangements removed to reflect the country’s Eurasian union commitments.

“Of course, not all areas can be included given that Armenia has undertaken certain obligations within the Eurasian Economic Union framework,” he said.

Current negotiations are still informal as the European Commission has not yet authorised EU officials to begin formal talks.

Melkonyan said Armenia’s Eurasian bloc partners were being kept up to date on where things stood with the EU. “That’s the normal way to proceed,” he said. “It’s the same in the EU, whose members can’t sign free-trade agreements with other countries on their own.”

He said Armenia was already in a unique position as the only Eurasian bloc member that is part of the GSP+ scheme, under which the EU gives “vulnerable developing countries” preferential access to its markets.

Some experts say that since Armenia is not in a position to increase its exports under GSP+ at the moment, there is little reason to expect that it will.

“Signing an agreement with the EU, or even having preferential trade terms with it, isn’t enough to mean that Armenian goods will storm the European market,” Mikael Melkumyan, an economist and member of parliament for the opposition Prosperous Armenian party, told IWPR. “Moreover, the EU is currently trying to open up new markets for its own goods, and is reducing the euro’s exchange rate to do this.

Alexander Petrosyan, a parliamentarian with the ruling Republic Party who also owns a wine and brandy factory, points to broader problems facing exporters.

“The EU market is effectively open to us, but we have problems with meeting their standards, exporting the large volumes required, and most important, establishing ourselves in the market,” Petrosyan told IWPR. “It’s a fairly capricious and brand-heavy market, and one that our manufacturers don’t know well. It takes colossal sums of money and a long period of time spent doing the right marketing just to get established in the market.”

Arshaluis Mgdesyan is a freelance journalist in Armenia.