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Threading the Needle: Armenia’s Policy towards the EU and the EAU     Print Email
By Armen Sahakyan, European Affairs Editorial Assistant

 

armensahakyanphotoIn today’s globalized economy, many smaller states can no longer compete in the world market on their own. The formation of economic-political blocs provides a competitive edge by combining national economies into stronger and deeper regional partnerships. For some states however, the conundrum is figuring out which bloc best serves their long-term national interests.

 

 

Since Russia, Belarus and Kazakhstan announced the formation of the Eurasian Union (EAU) in a declaration in 2011, Armenia, Ukraine and Moldova face just such a dilemma because of the simultaneous pull from the European Union to their west. The Declaration on Eurasian Economic Integration envisions the creation of the EAU by January 2015, after the codification of treaties making up the legal framework of the Customs Union and Single Economic Space.  

The EU is Armenia’s largest export partner accounting for 43.5% of the country’s total exports in 2011 (Russia was 16.7%). Russia, however, had a larger share in Armenia’s imports in 2011- 20.1%, and the EU accounted for 10.6%. A significant decrease in trade volumes with either Russia or the EU will have devastating consequences for Armenia’s small economy.armeniatradingpartners2011

Due to their historic and close links with Moscow, Armenia, Ukraine, and Kyrgyzstan are viewed as the most likely states in the former Soviet space to join the Customs Union and subsequently the EAU. Armenia and Ukraine are also in the midst of implementing integration processes with the EU, chiefly finalizing Association Agreements and Deep and Comprehensive Free Trade Agreements (DCFTA), under the framework of the EU’s Eastern Partnership Initiative. Competition for markets in the Caucasus and Eastern Europe is already developing between the EU and Russia and puts states in the “shared neighborhood” in the sensitive position of choosing between the two options.

Organizational rivalry is especially acute in Armenia, which participates in the EU’s Eastern Partnership Initiative and has recently signed a Visa Facilitation Agreement with the EU (with the vision of visa liberalization in the future).    A Deep and Comprehensive Free Trade Agreement is due to be signed by the end of 2013. Armenia cooperates with NATO and sends peacekeeping troops to Kosovo and Afghanistan. The upcoming EU Eastern Partnership Summit to be held in Vilnius this November will be an opportunity for the EU to further develop ties with Armenia and the other participating states.

Concurrently, Armenia heavily depends on Russia for its economic and military needs. The country is a member of the Collective Security Treaty Organization (CSTO) — a military bloc comprised of six former-Soviet republics, and has recently attained an observer’s status in the Eurasian Economic Community (EurAsEC), which will likely be one of the cornerstones of the EAU. Furthermore, Russia plays a special and dominant role in Armenia, serving as the security guarantor for the country and is the largest foreign investor in the state.  Moreover, because of Armenia’s settlement of debts to Russia, Russia owns substantial pieces of Armenian infrastructure.

Armenia seems unhurried to make a decision about joining one bloc or the other and will likely continue its current strategy of buying time from both for as long as possible. “There should be no contradiction between the integration processes taking place inside the CIS, EurAsEC and the EU,” Armenian Premier Tigran Sargsyan recently said.  “They should be viewed as supplementing each other. We are interested in European integration and the Agreement on the Deep and Comprehensive Free Trade Area is of primary importance to us today.”

But the European Union may not go along with this dual track approach.

Catherine Ashton's spokeswoman Maja Kocijancic ruled out the possibility of Armenia having close integration both with the EAU and the EU. “If Armenia were to join any customs union, this would not be compatible with concluding a bilateral Deep and Comprehensive Free Trade Agreement between the European Union and Armenia, because a customs union has a common external-trade policy and an individual member country no longer has sovereign control over its external-trade policies,” she said.

More recently, Elmar Brok, the Chairman of the European Parliament Committee on Foreign Affairs and Vice-chairman of the European People's Party (EPP), said that "the European Union cannot sign a Deep and Comprehensive Free Trade Agreement with a country that is a member of Russia-initiated Customs Union. Not only Armenia, but other member states of the Eastern Partnership project, must make the choice." And it is increasingly unlikely that that choice will be enhanced by the possibility of eventual membership in the European Union. During his recent trip to Armenia, President of German Bundestag Norbert Lammert said bluntly that that the EU is completely unready to accept new members.

Since its independence, Armenia has strived to follow a balanced foreign policy. Landlocked and hemmed in by Turkey and Azerbaijan, the country has no feasible alternative. Priorities outlined by the Ministry of Foreign Affairs demonstrate the tricky wicket Armenia must navigate.  On one hand Armenia seeks “strengthening and deepening the special partnership and allied relationship with Russia”, and at the same time “developing and deepening friendly partnership and enhancing cooperation with the United States,” as well as “integrating with the European family.”

Following the recent reelection of President Serzh Sargsyan, Armenia will likely continue the two-decades-long strategy of threading the needle.  During his recent trip to Russia (his first foreign trip after reelection), President Sargsyan did not publicly discuss Armenia’s potential accession to the Customs Union, although the “integration processes” (i.e. Customs Union/EAU) were on the official agenda.

“We are not solving a black or white issue”, President Sargsyan noted  in defense of Armenia’s choice to follow parallel paths. “We are honest in our desires, and our desires are based on our nation’s interests. We want the country to develop and use the Customs Union, Eurasian Union, and European Union’s help in this process.”

EAU Background

This year marks the middle point between the creation of the Customs Union (2010) between Russia, Belarus, and Kazakhstan and their plan to launch the Eurasian Union on 1 January, 2015.

The EAU is seen as the logical continuation of a process that began with the Eurasian Customs Union Treaty (2007), creation of Unified Customs Code (2010), adoption of Unified Customs Border (2011), and formation of a Single Economic Space (SES) as well as the Eurasian Economic Commission (2012).