Armenia in service of Russia to circumvent biting Western sanctions Why the West remains indifferent

As the Kremlin war on Ukraine is spinning out with no light at the end of the tunnel and the spillover effect being felt globally, Armenia pretends to stay beneath the radar equidistant to Moscow and Kyiv though statistics of commodities, Russia exports from its satellite, are disproportional in view of the latter’s economic capacity.

And the first thing that strikes is how Armenia managed to exceed the trade turnover with Russia to $5 billion in 2022, hitting a record 91.7 percent growth year-on-year, whereas their trade turnover amounted to $2.6 billion in 2021.

“Trade turnover between Armenia and Russia for the first time exceeded $5 billion in 2022,” Armenia’s Deputy Economy Minister Narek Teryan said in his address to the founding meeting of the Russian-Armenian Business Council at the Chamber of Commerce and Industry (CCI) of Russia.

Here lies the secret of “Armenia’s economic miracle,” that is, the resale and re-export of the much-needed and indispensable Western commodities to Russia amid biting sanctions.

The New York Times reported in April 2023, citing a US document, that in 2022, “Armenia imported by 515 per cent more chips and processors from the United States and by 212 per cent more from the European Union than in 2021. Armenia then exported 97 per cent of these products to Russia”.

Russia’s imports of key microchips and electronics are back to the pre-war levels in Ukraine, as Moscow sought other countries to resell the hi-tech components after their purchase from European companies, Jim O’Brien, US State Department Sanctions Coordinator, confirmed in an interview.

Western exports of key microchips and electronics that Russia needs to fuel its war machine are back to pre-invasion levels, as Moscow has pumped up efforts to circumvent sanctions, the top US official further added.

“By the start of this year, Russia was able to reimport certain key categories of electronics at about pre-war levels,” Jim O’Brien, sanctions coordinator at the US State Department, told Politico, referring to chips, processors, and integrated circuits key to making modern weapons.

In the meantime, the Armenian pro-government Telegram channel Baghramyan 26 said that Russia tops the list of Armenia’s exports for January-June 2023 with 1.676 billion dollars.

An eagle-eyed economist would easily notice discrepancies between these figures for the previous two years and the one for six months of 2023. Given the available six-month statistics, it is hardly possible for Armenia to export goods of more than 1.676 billion dollars in the next half of 2023. And the question naturally arises is what commodities Armenia exported to Russia in 2022 and the natural answer is what Jim O’Brien said about the evasion of sanctions by Yerevan with the tacit approval of Pashinyan, who credited his government’s economic performance but failed to back it up with hard facts.

Armenia has recently hit the headlines for circumventing international sanctions on Russia – the claim the Pashinyan government rushed to flatly reject though facts are stubborn since everything is obvious when you look into the list of commodities the tiny South Caucasus nation, often referred to as the country of stones, exports.

Armenia denied circumventing international sanctions on Russia and the country’s Central Bank reported the tightening of restrictions on foreign transactions. The latter added that in view of the new sanctions on Russia, terms for foreign transactions have been significantly tightened for all banks in the region, including Armenian banks, adding that the number of refusals to perform certain transactions can also increase if commercial banks consider transactions risky according to their evaluation criteria.

In May 2023, the Armenian government tightened control on the exports of electronic equipment to Russia and obliged the local exporters to seek government permission to deliver electronic equipment to Russia.

Armenian Prime Minister Nikol Pashinyan said earlier that although Armenia has deep economic and strategic relations with Russia, it could not afford to fall under Western sanctions and respectively it will act in relation with Russia to the extent that will allow Armenia to avoid Western bans.

The Armenian prime minister also denied being Russia's ally in the war against Ukraine.

"This has never been said out loud, but I think this is visible. We are not Russia's ally in the war against Ukraine. Our feeling regarding that war, that conflict, is that of anxiety because it directly affects all our relationships," Pashinyan said in an interview with CNN Prime News during his visit to Czechia in May.

He added that the general perception in the West is that “we are Russia's ally, in Russia they see that we are not their ally in the Ukraine war. As a result, we are not anyone's ally in this situation, which means that we are vulnerable".

"It may seem that there is an option to avoid all these conflicts, but the truth is the more complicated the situation gets, the narrower is the room for maneuvers," the prime minister said.

Armenia is trying to avoid getting involved in the conflict not because it does not have its own opinion about the conflict, but because it has many problems itself that do not allow it to get further involved in resolving other problems, he added.

But still, it is obvious that Armenia serves as one of a few gateways for Russia to skirt sweeping Western sanctions and export highly-needed spare parts for military needs.