Issue 2, 2014. April-May

   

AFTER CRIMEA: WILL THE CRISIS AFFECT ARMENIA AND ITS PATH TOWARD THE RUSSIAN-LED CUSTOMS UNION?

Investor.ge interviewed Richard Giragosian, the director of the Regional Studies Center (RSC) in Yerevan, Armenia, about the potential impact of the Ukrainian crisis on Armenia's decision to follow Russia into its Eurasian Customs Union instead of signing an Association Agreement with the European Union.

Even before the Ukraine crisis and the March 16 referendum in Crimea, the conflict between Moscow and the West was playing out between Georgia and Armenia - two neighbors with close trade relations. Today, there is little indication of how events will evolve in Ukraine, or what impact they might have on other former Soviet republics. For Georgia and Armenia, however, the battle over the fate of Crimea and Ukraine could have an immediate effect on foreign policy and future trade relations between the two countries.

Investor.ge: How is the crisis in Crimea affecting Armenia? Is it having an impact on the debate around joining the Eurasian Customs Union? To what extent do you think it could influence Yerevan as the government moves toward joining the Eurasian Customs Union?

Richard Giragosian: Throughout the crisis, the Armenian government has been especially cautious, largely due to a policy decision to refrain from doing or saying anything that would anger or alienate Armenia's "strategic partner," Russia. At the same time, however, the broader context of the Ukraine conflict has significant implications for Armenia, especially in terms of Russian power and influence in the so-called "near abroad" and concerning the outlook for the Russian-led Customs Union. More specifically, the new Ukrainian government's commitment to signing the Association Agreement with the EU now makes the Russian-led Customs Union significantly less viable and a much less attractive project. In this way, Moscow's apparent "loss" of Ukraine may actually provide the Armenian government with an effective way out of having to join the Customs Union and an attractive way for Yerevan to "save face" and avoid the embarrassment of its move to quickly give in to Moscow and give up on Brussels.

Investor.ge: Why did the Armenian government opt for the Russian-led Customs Union over the EU Association Agreement? What does Russia offer Armenia that the EU cannot?

Richard Giragosian: Looking back at the surprise announcement on September 3, 2013 by Armenian President Serzh Sarkisian in Moscow pledging that Armenia would join the Russian-led Customs Union, and would support Moscow's efforts to "integrate" the former Soviet space, it is now obvious that it was a missed opportunity and a strategic setback for the country. That decision effectively ended Armenia's planned initialing of an Association Agreement and related Deep and Comprehensive Free Trade Area (DCFTA) with the European Union set for the Vilnius Summit in late November 2013.

Moreover, Moscow's apparent success in forcing Yerevan to backtrack on its intention to finalize pending agreements with the EU imposes several significant challenges on Armenia. In the short-term, once Armenia retreated and reneged on its planned "initialing" of an Association Agreement and related Deep and Comprehensive Free Trade Area (DCFTA), it will be hard pressed to recover confidence and credibility. Such a move not only imperiled several years of difficult negotiations and reform, but also tested European patience and diminished European interest in Armenia. The decision to join the Customs Union also offers Armenia little if any alternative benefits, and may lock Armenia even more firmly within the Russian orbit, limiting its future to little more than a captive to Moscow's grand project for a rival Customs Union, as the first step toward the so-called "Eurasian Union." And in that broader context, the danger for Armenia stems from greater isolation, as closed borders remain sealed, and from a newly enhanced degree of insignificance, as the strategic importance of Armenia may only dramatically decrease. And, most distressing, Armenia also faces the very real threat of becoming little more than a "small, subservient Russian garrison state."

Further, the longer-term impact on Armenia will also be significant, undermining the Armenian government's already meager legitimacy by endangering the overall reform program and significantly weakening pro-Western reformers within the government. In addition, from a broader perspective, the Armenian retreat from its planned Association Agreement with the EU and its move toward Russia's Customs Union also reveal several deeper deficiencies within the Armenian government in terms of closed public policy, inadequate strategic planning and an informal decision-making process.

But in terms of Armenia's surprising decision, it is now clear that the "U-turn" or sudden shift in policy actually occurred in Moscow first. For example, the lack of any real Russian pressure on Armenia through the nearly four years of negotiations over the Association Agreement suggests two conclusions. First, for the past several years, Moscow clearly failed to see EU engagement as a real threat. Such a view may have been rooted in Moscow's perception of the EU as neither a significant geopolitical actor nor as a serious rival. Second, the rather last-minute shift in Russian policy, as demonstrated by the imposition of coercive measures on other states, such as Moldova and Ukraine, viewed Armenia as more of a "sacrificial pawn," designed to send a more important message of strength to deter similar European aspirations by Chisinau and Kiev.

In the case of Georgia, however, there is little Russian leverage and no utility in trying to deter Tbilisi's commitment to its EU aspirations. The Russian strategy is not benign, however, and it seems likely that Moscow will initiate a new campaign of pressure against Tbilisi targeting the implementation process after the signing of Georgia's Association Agreement.

On a broader level, therefore, this shift in Russia's policy toward EU engagement stems from a much larger and more assertive Russian stance, driven by an attempt to consolidate Russian power and position within the former Soviet space and to deter Western "interlopers" in what Moscow views as its natural "sphere of influence," or the "near abroad," referred to as blizhneye zarubezhye (ближнее зарубежье), which has been elevated and expanded into a wider "post-Soviet space." Moreover, this trend of a boldly assertive Russia has only deepened in recent years, and is now evident in the larger context of Moscow's policies toward the U.S. and over Syria, for some examples. Another demonstration of this trend has been Russia's heavy-handed use of coercive measures targeting some of its neighbors, as the events of 2008 in Georgia have only confirmed.

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