In what looks like a last-ditch attempt to scuttle the deal, Moscow is increasingly signaling displeasure with the Armenian leadership's desire to diversify its geopolitical options through European integration and stay away from the planned new Russian-led union of former Soviet republics. Some Kremlin-linked pundits have openly warned of fatal damage to the Russian-Armenian alliance.
The official Russian stance on the issue has been more cautious so far, however. It is likely to remain so even if the Armenia-EU Association Agreement is finalized, as planned, at an EU summit in Vilnius scheduled for November. Russian President Vladimir Putin should be safe in the knowledge that as much as it precludes Armenia's accession to a Eurasian Union of former Soviet republics, the accord poses no direct threat to Russia's strong military and economic presence in Armenia.
Speculation about Russian pressure on Armenia intensified after the speakers of both houses of Russia's parliament, Sergey Naryshkin and Valentina Matviyenko, promoted Putin's "Eurasian project" during separate visits to Yerevan in July 2012. Putin and his Armenian counterpart, Serzh Sarkisian, discussed the issue when they met in Moscow in August 2012. They agreed to set up an intergovernmental working group to explore ways of Armenia's possible involvement in the customs union of Russia, Belarus, and Kazakhstan, which Putin regards as the starting point of the future Eurasian Union.
While voicing support for "Eurasian integration processes" in public statements, the Armenian side remained essentially noncommittal on the customs union in the following months. Some Armenian leaders, notably Prime Minister Tigran Sarkisian, continued to argue that Armenia cannot join the Russian-dominated trade bloc because it has no common border with any of its member states.
Fresh talks held by Putin and Serzh Sarkisian in December and March were not followed by any concrete announcements on the issue. The Armenian president insisted later in March that his administration is not facing any Russian pressure to join the customs union. Yerevan further underscored its desire to avoid such membership with an essentially nonbinding memorandum of understanding that was signed in April by Tigran Sarkisian and Viktor Khristenko, the Russian head of the union's executive body.
In the meantime, Armenia's talks with the EU on the Association Agreement -- including its key component, the creation of a Deep and Comprehensive Free Trade Area (DCFTA) -- were nearing completion.
"We are a nation bearing European values," Serzh Sarkisian declared during a June 25 visit to Warsaw.
Two weeks later, Moscow gave the clearest indication yet of its discontent with Yerevan's European integration drive. Vyacheslav Kovalenko, who was Russia's ambassador to Armenia until March 2013, warned that the Sarkisian government will risk alienating Moscow if it prefers closer ties with the EU to membership in the Eurasian Union.
"By embracing European values, Armenia, it appears, could step onto a slippery path. As they said in ancient times, 'The road to hell is paved with good intentions,'" Kovalenko told EvrazesNews.ru, the website of a Moscow-based youth organization promoting the Eurasian Union.
In an apparent bid to allay Russian fears, President Sarkisian insisted on July 12 that the EU's Eastern Partnership program, which makes six ex-Soviet republics eligible for association deals, is "not directed against any state or grouping of states." The European Commission announced the "substantive completion" of the three-year association talks with Armenia later in July, making the initialing of the Association Agreement at the Vilnius summit all but a forgone conclusion.
Meanwhile, a host of Russian pundits and Kremlin-linked online publications have been issuing stark warnings to the Armenian government. Konstantin Zatulin, a former senior Russian lawmaker who heads the CIS Institute in Moscow, blasted "the disdainful attitude to the Eurasian integration project in Armenia" in a July 11 interview with the Regnum news agency.
"The West is competing with Russia, trying to impede any integration processes in the Eurasian space. He who sides with our competitor will face the consequences of that choice," Zatulin said.
Andrey Yepifantsev, another Russian analyst, was quoted by Regnum as warning on August 5 that the forthcoming association deal could lead Moscow to withdraw its security guarantees to Armenia and become more supportive of Azerbaijan in the Karabakh conflict.
Yet the fact is that the Kremlin has actually bolstered the Russian-Armenian military alliance over the past year, despite being presumably well aware of Yerevan's intentions with regard to the EU. Substantial Russian weapons deliveries to the Armenian military appear to have continued unabated, as have frequent mutual visits by top military officials from the two states (The Russian and Armenian defense ministers met twice early this year.) As recently as June 25, the two sides signed a new defense agreement paving the way for joint arms manufacturing and repair.
In a further sign of its enduring confidence in its main regional ally, Russia reportedly deployed in Armenia earlier this year Iskander-M advanced ballistic missiles capable of striking targets more than 400 kilometers away. The missile systems were apparently delivered to the Russian military base headquartered in the northern Armenian city of Gyumri. Visiting Gyumri on June 24, Nikolay Patrushev, the secretary of Russia's Security Council, said Moscow will continue to "modernize" the base with new weaponry.
Nor has the Russian government publicly criticized Sarkisian's foreign policy or tried to undercut him ahead of the February 2013 presidential election. Sarkisian's potentially most formidable election challenger, Prosperous Armenia Party leader Gagik Tsarukian, apparently failed to secure Russian support and announced unexpectedly in December he would not participate in the ballot. Tsarukian is widely regarded as a protege of Robert Kocharian, Sarkisian's more pro-Russian predecessor as president.
President Sarkisian also managed to convince Russia's Gazprom monopoly to delay a long-awaited rise in the price of its natural gas for Armenia until after the presidential ballot. The new gas price, which took effect in April, is still considerably below the cost of Russian gas supplied to Ukraine and Central and Western Europe. The Armenian government hopes that the Russians will help it subsidize the gas tariff for domestic consumers. It may have to hand over more energy assets to Gazprom in return.
Gazprom and another Russian energy giant, Unified Energy Systems, already own Armenia's electricity and gas distribution networks and two large thermal power plants, as well as a cascade of hydroelectric stations. Other Russian firms have extensive interests in the Armenian telecommunication and mining sectors. Even assuming that the EU is keen to bring Armenia closer to the West, the Association Agreement clearly does not jeopardize or challenge Russia's economic and military footholds in Armenia. The agreement does not promise Armenia eventual membership of the EU, or require a radical reorientation of its foreign and security policies. Its key requirement to Yerevan is to bring Armenian economic legislation into conformity with EU standards in return for permanent tariff-free access to the world’s largest and most affluent single market.
Armenia, for its part, is seeking to complement, rather than discontinue or downgrade, its alliance with Russia in the hope of boosting exports, securing greater economic assistance from the EU, and making its struggling economy more attractive to foreign investors. Yerevan is also not averse to hedging its bets in regional geopolitics.
At the same time, the current impasse in the Karabakh peace process and oil-rich Azerbaijan's continuing military buildup gives it no choice but to remain heavily reliant on close defense cooperation with Russia. This explains why the Sarkisian administration avoided publicly criticizing the Russians after it emerged in June that they have begun delivering $1 billion worth of tanks and other offensive weapons to Azerbaijan.
The Association Agreement’s biggest practical disadvantage for the Kremlin is that it would preclude Armenia's possible accession to the Customs or Eurasian unions, which EU officials say is "not compatible" with the DCFTA. But Armenia is too small to make or break Putin's Eurasian project, and the problem with its nonparticipation is a largely psychological one for Russian policymakers. They have taken Armenia's loyalty for granted for too long to easily start treating it as more of an ally than a client state. But they still seem prudent enough to avoid an open confrontation with the government of what is still one of the few pro-Russian countries in the world.