Armenia-Russia: Old ties, new projects, uncertain future

Photolure
Photolure

Despite the optimistic tone of the meeting of the Armenian-Russian intergovernmental commission, which took place in Yerevan late last week, it still revealed the reluctance of Yerevan to strengthen its ties with Moscow.

First, it was stated that Yerevan is categorically against the Russian immigration program, Compatriots, by which about 5,000 Armenian citizens have left Armenia and settled down in Russia. Second, at the government level it was reiterated that Armenia is unwilling to join the Customs Union of Russia, Kazakhstan and Belarus – a new integration process in the former USSR territory expected to consummate in the establishment of a Eurasian Union later this decade.

As a result of their Yerevan meeting the Armenian and Russian sides only signed a program of long-term economic development until 2020 which provides for “an ambitious growth of bilateral trade relations and investments”, as it was stated by Armenian Prime Minister Tigran Sargsyan. In saying that, officials still did not point to a single major project in which Armenia expects Russian investments. The matter may concern the construction of a new unit of the Armenian nuclear power plant and the Iran-Armenia railroad. The future price of Russian natural gas supplied to Armenia was not specified either.

Judging by the statements, Russia insisted on Armenia’s joining the Customs Union, making both investments and the price of natural gas contingent on this move.

Russian Transport Minister Maxim Sokolov expressed confidence that the parties would be able to agree on a mutually acceptable price of natural gas.

Armenia’s Minister of Energy and Natural Resources Armen Movsisyan said: “Unlike other countries we are going to have a rather low price of gas.” He did not specify, however, what the price is going to be as compared to the current price of $180 per 1,000 cubic meters.

Russia has also promised investment in the railway, but the issue will be discussed only in December, apparently during the expected visit of Russian President Vladimir Putin to Armenia.

Advisor to the President of Russia Igor Levitin said that Armenia’s possible participation in the Customs Union was being discussed in spite of the fact that the two countries do not share a common border.

However, Armenia’s Minister of Economy Tigran Davtyan said: “Joining the Customs Union does not imply free trade with third countries that are not in it, while Armenia has a free trade agreement, particularly with neighboring Georgia.”

Davtyan also pointed to the fact that 60 percent of the state budget of Armenia is formed at the state border, while with the entry to the Customs Union the management of these sources of revenues will be transferred to a supranational center. “And I’m not sure that all of the solutions of this center will entirely meet the national interests of Armenia,” he added.

And Deputy Minister of Foreign Affairs of Armenia Shavarsh Kocharyan made what all but amounted to a sensational statement. He said that the controversial Russian immigration program, Compatriots, cannot be implemented in Armenia against the country’s will.

The intergovernmental commission’s session resulted in the signing of protocols in which the sides laid down their attitudes towards this program.

“The positions of the sides are clearly formulated in the protocols: the Russian side is interested in the continuation of this program, and the Armenian side is categorically against it,” said Kocharyan. According to him, the program cannot be continued in Armenia on the basis of Armenia’s “clearly expressed position”.

Earlier, during a question-and-answer session in parliament Prime Minister Tigran Sargsyan said that the format of the implementation of the Russian program was unacceptable to the government of Armenia.

The goal of the program is to promote and organize voluntary resettlement of former USSR “compatriots” to Russia, a country experiencing demographic problems. The realization of the scheme in Armenia, however, also caused dissatisfaction as it is regarded as an additional stimulus for out-migration, which is already high in Armenia.

Apart from these concerns, the sides appeared to be content with the development of economic ties.

During the eight months of the year, the trade turnover between Armenia and Russia increased by 23 percent as compared to the same period of 2011, amounting to $880 million. In addition, as the Armenian prime minister said, imports from Russia to Armenia totaled $640 million, showing a 17-percent rise, while exports of Armenian goods and services to Russia made $168 million, registering a 50-percent increase. Work on the operation of free economic zones in the territories belonging to the Russian company, Sitronics Ltd. RAO Mars, and the Yerevan Scientific-Research Institute of Mathematical Machines is in progress. Russian companies also control the basic infrastructure of Armenia – the railway, power grids, the natural gas system, the bulk of the communications market.

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