Thursday, August 25, 2016

Caucasus Report

Armenian U-Turn On EU Not As 'Objective' As Thought

Armenian President Serzh Sarkisian (left) has given the impression that he's keen to restore the Kremlin's trust, shaken by his European integration drive, at any cost and as quickly as possible.
Armenian President Serzh Sarkisian (left) has given the impression that he's keen to restore the Kremlin's trust, shaken by his European integration drive, at any cost and as quickly as possible.
Armenia's last-minute decision to join a Russian-led customs union at the expense of much closer ties with the European Union has been widely attributed in the West to strong pressure and bullying by Russia. The dominant view among policymakers, diplomats, and pundits there is that President Serzh Sarkisian had no choice but to cave in because of his country's heavy dependence on its main geopolitical ally.

The picture is more complex on closer inspection, however. Sarkisian's parochial interests appear to have been at least as much in play as economic and security considerations. The haste with which his administration is holding accession talks with the Customs Union of Russia, Belarus, and Kazakhstan and its reluctance to seek significant Russian concessions in the process suggest that he is driven at least in part by a deep sense of personal insecurity.

Moscow increasingly indicated its displeasure with Yerevan this summer as the latter intensified and completed negotiations with the EU over a far-reaching Association Agreement. EU representatives repeatedly made clear that the agreement was "not compatible" with possible Armenian membership in Moscow's customs union. Armenian leaders did not object to this precondition before the EU announced in late July the "substantive completion" of the association talks.

The stage was thus set for the agreement's initialing at the EU's November summit in Vilnius. Vyacheslav Kovalenko, Russia's ambassador to Armenia until March 2013, had joined a host of Kremlin-linked pundits in warning earlier in July that Yerevan would risk alienating Moscow if it stayed out of the Russian-led trade bloc.

Sarkisian's decision to opt for the customs union was privately communicated to Brussels on August 31 and made public following his September 3 talks with Russian President Vladimir Putin held near Moscow. Sarkisian has made only two brief public statements (none of them in Armenia) explaining his dramatic volte-face. "I have repeatedly said before that when you are part of one system of military security it is impossible and ineffective to isolate yourself from a corresponding economic space," he told a joint news conference with Putin.

Strong Enough Levers?

Russia does have strong economic and military levers to exert strong pressure on its sole South Caucasus ally, but their potential impact should not be overestimated. Armenia might have faced the kind of Russian trade sanctions that have been imposed on Moldova and Georgia in recent years had it pressed ahead with the EU accord. But Russia absorbs less than one-quarter of Armenian exports, mainly buying agricultural products, prepared foodstuffs and alcoholic beverages. A Russian ban on these imports would have hit Armenia's agriculture hard, but it would not have been enough to wreck the struggling Armenian economy as a whole.

According to Armenian government data, Russia accounted for 23 percent of Armenia's foreign trade in January-October 2013, compared with the EU's almost 29 percent share. Much of the Russian-Armenian trade volume is generated by supplies of Russian natural gas used for producing over one-third of Armenia's electricity, heating homes in the winter, and powering, in the liquefied or pressurized form, the majority of vehicles in the country.

Russia's Gazprom monopoly mostly reversed a 50 percent rise in the gas price, officially announced in April, shortly after Armenia decided to join the customs union. At almost $190 per 1,000 cubic meters, it is currently well below international market prices. Armenian Energy Minister Armen Movsisian has claimed that Armenia could not switch to large-scale gas imports from neighboring Iran because the latter would charge it as much as $400 per 1,000 cubic meters.

The Iranian ambassador in Yerevan, Mohammad Reisi, held two news conferences within four days early this month to effectively deny Movsisian's claims. Reisi implied that the Iranian gas price for Armenia might have been set lower than the current Gazprom tariff. The Armenian government has not even attempted to negotiate with Tehran over significant gas deliveries, he said.

Remittances sent home from Armenian migrant workers in Russia are a more important factor behind the Russian economic influence. They accounted for more than 80 percent of the $1.7 billion in noncommercial cash transfers to the country in 2012, a sum equivalent to over 16 percent of its gross domestic product.

There were fears in Armenia that Moscow could seek to halt those remittances, including by deporting en masse Armenians working in Russia. But most of Russia's estimated 2million-2.5 million Armenians are Russian citizens. The Russian Federal Migration Services puts the number of Armenian nationals who resided in the country as of October at around 500,000. Their mass deportation would have been both politically and technically problematic. Even Georgian and Moldovan migrants have not been sent home in their thousands to date.

...Or Dangerous Enough?

Russia's strongest leverage against Armenia has to do with national security. The unresolved Nagorno-Karabakh conflict has forced the Armenian side to rely heavily on close military ties with Moscow, enabling it to receive large quantities of Russian weapons at knockdown prices or even free of charge, and thus stay in an intensifying arms race with oil-rich Azerbaijan.

It emerged in June that Russia has begun delivering $1 billion worth of tanks and other offensive weapons to Azerbaijan. Putin raised Armenian fears of more such arms sales when he paid a high-profile visit to Baku in mid-August. Armenian pro-government politicians now say that the integration pact with the EU would have put the Russian-Armenian military alliance at risk and encouraged Azerbaijan to unleash another war for Karabakh. The implication is that the Russians threatened to end military aid to Armenia and sell more weapons to Azerbaijan.

Assuming that such threats were indeed made, they involved an element of bluff. Russia began selling weapons to Azerbaijan even before the start of the Armenia-EU association talks in 2010, and the recently disclosed Russian-Azerbaijani arms deliveries were reportedly signed in 2011. Besides, Russian arms supplies to Armenia intensified even when the Sarkisian administration was on course to conclude the Association Agreement.

Moscow is clearly not interested in an Azerbaijani military victory in the conflict as it would leave the Armenians with no major reason to host Russian troops in their territory and to maintain broader Russian-Armenian military cooperation. The Association Agreement could in no way jeopardize that cooperation as it offered Armenia no prospect of eventual membership of the EU, let alone NATO. Gagik Minasian, a senior lawmaker affiliated with the ruling Republican Party of Armenia (HHK), emphasized this fact when he ruled out the possibility of Russian economic sanctions in an August 20 interview with RFE/RL's Armenian Service.

A Personal Angle

Sarkisian's subsequent efforts to make Armenia part of the customs union as soon as possible -- without the kind of haggling engaged in by Ukraine and even Kyrgyzstan -- raised more questions about the theory that his strategic U-turn stems only from regional geopolitics. "We are struggling to keep up with our Armenian partners," Putin commented tartly on the accession talks during a December 2 visit to Yerevan.

The gas-price discount is the only major Russian reward announced so far. Yet even it comes with a catch: unprecedented privileges granted to Gazprom in the Armenian energy sector. Russia has not even rescheduled a $500 million debt extended to Armenia in 2009. The authorities in Yerevan repaid it in October with proceeds from the first-ever sale of Armenian eurobonds.

Sarkisian is giving the impression that he is keen to restore the Kremlin's trust, shaken by his European integration drive, at any cost and as quickly as possible. Concern for his power seems a plausible explanation for this tactic. Sarkisian succeeded in neutralizing his political opponents during his first presidential term. But virtually none of them has recognized the legitimacy of his disputed reelection in February 2013 and ruled out the possibility of challenging him in the streets.

An open confrontation with Moscow could have emboldened some opposition forces, notably the Prosperous Armenia Party of Gagik Tsarukian, a wealthy businessman close to Sarkisian's predecessor, Robert Kocharian, who reportedly spends much of his time in Moscow. Some local observers believe that the Kremlin is also in a position to engineer mass defections from the ruling HHK's parliamentary faction.

The Armenian president does not need a powerful external enemy, especially now that he seems intent on extending his rule beyond 2018. The day after announcing his customs-union U-turn he formed an ad hoc commission on constitutional reform. The Armenian media has since been rife with speculation, not denied by presidential allies, that Sarkisian wants to turn the country into a parliamentary republic and become a powerful prime minister after completing his second and final presidential term, just as former Georgian President Mikheil Saakashvili sought unsuccessfully to do.

The Armenian Constitution can be amended only through referendums. Sarkisian will not find it easy to muster the support of at least one-third of the country's 2.5 million eligible voters needed for the passage of amendments. Any attempt to rig the referendum would most probably spark street protests and unite the fragmented opposition against him.

-- Emil Danielyan
This forum has been closed.
Comment Sorting
by: Camel Anaturk from: Kurdistan
December 30, 2013 16:49
If you take into consideration the many promises given to Armenia by its western allies prez.Sargisyan`s decision to side with Russia is not that extraordinary.Armenia has a lot to learn from its big neighbour as the reaction from the azeri side clearly shows.Any other reaction from the armenian side would be tantamount to Armenia and its interests.

by: Gary Mailyan from: Glendale, CA
December 30, 2013 22:34
Sarkisian is a traitor and he should be officially charged for surrendering his country's sovereignty to a foreign nation. That which Russia has sown on October 27th through Kocharyan, it has reapped on September 3rd through Sarkisian. GOD bless all those North Caucasian fighters against the Russian Empire. They are Armenia's best allies even if they don't mean to be. Russia's weakened grip on North Caucasus allows South Caucasian nations to develop free of Russia's imperial grip. Vise versa tight Russian control over North Caucasus allows Russia to concentrate on breaking South Caucasian nations, including Armenia. However I am glad that Russia has temporarily subjugated Armenia, so about half of Armenian nation that is hopelessly prorussian will see its ill effects in terms of everything, including economy and dignity. It should run its full cyclical course so that the historically brainwashed Armenian elites would see the poor effects of their unwise choice.

by: john from: LA
December 30, 2013 23:05
enough of your lies and propaganda. People see right through you by now.
In Response

by: Garen from: Mailyan
January 02, 2014 02:00
I don't know who you are and what your motives are via via Armenia, but I get the idea that you are one of those brainwashed pro-russian Armenians. Look at Turkey and understand that the reason for Turkey's high international status as a G20 member is due to development that it enjoyed because of its pro-western, pro-American orientation. Armenia has historically been pro-Russian and poor. Turkey has been pro-western and rich. Do I need to make any other point?

by: Landau
December 31, 2013 12:43
If you imagine that Armenia is man, which made heavy car accident in early 90-ies of past century and seemed to have only one arm broken, but also had internal beeding, the results of which you can see now, it describe the whole situation of official Yerevan.

In the first years of regaining it,s independence Armenia seemed to be the most prosperious state of South Caucasus, but unthinked acts made by it,s government (occupation of azerbaijiani territories, territorial claims to Turkey, alliance with Russia and etc.) drew armenian people to deadend future.

One can hope that there might be some miracle, that can save Armenia from extinction, but it,s almost impossible. The results of thinkless armenian policy begins to appear now. The country have huge depts, devastating migration of young population, poverty, nationwide stress and other.

It is very shameful that the state, which tried to increase it,s territory by occupying the lands of other state, now the de facto lost sovereignty and becomes part of another country.

Here the place to use the proverb: "As you sow, so shall you reap".

In Response

by: parvenu from: US
January 01, 2014 01:56
And you should not ever underestimate Armenians. They are survivors by genetic makeup.
In Response

by: Davit
January 01, 2014 03:23
Armenia has made no occupations of "azerbaijiani territories", for they do not exist, only liberations of Armenian territories. The only territorial demands made to turkey were also of occupied Armenian lands.

Before you try and satisfy yourself with Armenian issues before going to sleep tonight, kept up by the sound of protestors being killed in the streets, you should remember your own kind is plenty damned.

Indeed, azerbaijan sought to sow oppression amongst the people of occupied people of Artsakh, and now they reap oppression from a dynasty of dictators. Several articles could be written about poverty and immigration in azerbaijan itself. Same for turkey, who are now honored by the title of Most Jailed Journalists in the World.

It is interesting that while Armenia people discuss the issues of their homeland, your people use it as a drug and ignore your own.
In Response

by: Landau
January 02, 2014 22:51
Davit, the fact that, Armenia occupied territories of Azerbaijan. You have to respect international law. Quoting territoral integrity of Azerbaijan do not changes the fact that the world, including Armenia (oficially) recognizes Karabagh as azerbaijani land. And unlike Azerbaijan, Armenia is not recognized as a state by some countries (Pakistan, Saudi Arabia) because of its occupation policy.

EU and CU (Customs Union) warned Armenia, that it can enter to this organisations without Karabagh, what means that they confirm this lands as territories of Azerbaijan: .

Also you can read appropriate resolutions of UNSC about occupation of azerbaijani territories (1993: res-s 822, 853, 874, 884) and EU approach toward solution of Nagorno-Karabakh conflict in which stated, that EU demands the withdrawal of Armenian forces from all occupied territories of Azerbaijan

Then, president of, one of the CU members, Kazakhstan stated about accepting Armenia into Customs Unions only after explanations about Karabagh issue

Which protestors you talking about Davit? Are you talking about unarmed protestors which killed in Yerevan on March 1 after presidential elections

I am not targeted to lie or slander Armenia and armenians. All I said is truth. Over the last century, Armenians was used by strong states as an object of implementation of their interests. And now we see the same situation.

What about Azerbaijan, nobody says that everything is okay in this state. And, yes, I agree and can prove that nowadays Turkey, under the rule of AK Party and Erdogan, is regressing. And this government is aimed to weaken and may be destroy this country.

I do not ignore other problems, but the topic is about Armenia. You do not discuss about cows, when the topic is about tree, am I right?
In Response

by: Gary Mailyan from: Glendale
January 02, 2014 01:45
Stop your Jewish landauish anti-Armenian propoganda. I am sick of you judeo-israelaites at trying to undermine legitimate aspirations of the Armenian nation. Look up your history books and maps and you will be able to state that Armenians liberated a small part of their historical territory.

by: minas
December 31, 2013 13:58
The whole article is based on speculation and assumption. First off, it's interesting how Mr. Danielyan trivializes Russia's economic leverages in Armenia, there are industries in Armenia which are fully dependent on Russia for survival, needles to say that Russia manages Armenia's entire energy sector. Secondly, it's true that Russia needs Armenia as its only ally in the region but Russia has the power to destabilize the region. Armenians can't afford to lose even one inch of the liberated lands. In any case Putin is a maniac and he has shown before that you cannot mess with him.
In Response

by: Gary Mailyan from: Glendale CA
January 02, 2014 02:06
Minas, it never pays to surrender one's sovereignty. Passed that there is no development. Armenia crossed that line under Sarkisian. It means Sarkisian should be removed, and govt.'s policy should be overturned from Russia to West - EU and USA.
In Response

by: minas
January 02, 2014 13:24
Sovereignty has relative meaning. In today's world, you can hardly find a sovereign nation, even the US is not fully sovereign, it needs Chinese cheap goods to survive. I wish we had the kind of leader who could truly transform Armenia but we don't. I doubt we can trust our small country to the likes of Raffi or Zaruhi Postanjian, they are good people but Armenia needs more than good.
In Response

by: parvenu from: US
January 03, 2014 01:34
Good post on relative sovereignty Minas. Those two you mention are hardly "leaders", they talk a lot though.

by: Mamuka
December 31, 2013 14:18
I think Landau has summed the situation up well. But pursuing an alternative path-- attempting to integrate with EU while antagnonizing Russia-- would seem to be a near-suicidal move for Hayastan, at least in the short term. And if you kill yourself in the short term, that does not leave much of a long-term in which to recover.
In Response

by: Garen from: Mailyan
January 02, 2014 01:52
Mamuka, watch out for landau's Zionist propoganda. It is based on ignorance of historical facts. As to your point that Armenia had no choice, but to give into Kremlin's blackmail, I disagree, since EU is a clear alternative to the traditional players of the region - Russia, Turkey and Iran.

About This Blog

This blog presents analyst Liz Fuller's personal take on events in the region, following on from her work in the "RFE/RL Caucasus Report." It also aims, to borrow a metaphor from Tom de Waal, to act as a smoke detector, focusing attention on potential conflict situations and crises throughout the region. The views are the author's own and do not represent those of RFE/RL.