Balancing CSTO/EAEU against EU/NATO integration Armenia at crossroads

On May 8, Moscow hosted a meeting of the Supreme Eurasian Economic Council. Armenia is currently the next chair in the EAEU, while its current leadership has long looked in a completely different direction...

Eurasian meeting in chilly Moscow May

The summit was a jubilee event; this year, in fact, the EAEU turned 10 years old, and the process of "Eurasian" post-Soviet economic integration was launched in 1994. But at the same time, it was also a working meeting - it discussed a number of current issues, including the EAEU's international activities.

The report by the Eurasian Economic Commission sounded optimistic - a trade agreement with Iran was concluded in 2023, memorandums of cooperation were signed with Myanmar and Nicaragua. The Supreme Eurasian Economic Council approved a forthcoming trade agreement with Mongolia. Cooperation with the EAEU observer states - Uzbekistan and Cuba - and interaction with BRICS, SCO, and ASEAN was also developed. The future plans of the organization are also quite ambitious - the EAEU is positioned as one of the economic centers of the Greater Eurasian Partnership integration circuit.

The leaders of Russia, Kazakhstan, Belarus, Kyrgyzstan and Armenia attended this summit of the heads of the EAEU member states. Uzbek President Shavkat Mirziyoyev and Cuban President Miguel Diaz-Canel attended the meeting in an expanded format as observers. The meeting was held in the Kremlin. From external details - upon the arrival of the Armenian delegation, the officer of honor guard standing at the entrance took the badge around the neck of the accompanying Armenian Prime Minister in his hands to get a closer look. Nikol Pashinyan himself started briskly ascending the long staircase in the Kremlin Palace, but towards the end he slowed down considerably.

The Armenian Prime Minister was supposed to chair the meeting, but Vladimir Putin actually opened the meeting. When the Russian President began to pour over the figures of the EAEU's successful indicators, the Armenian Prime Minister even changed his face. However, it is hard to understand what it meant - approval, surprise or skepticism? Among the curiosities noted by the journalists present, the Russian President called the head of the Armenian government "Nikol Vladimirovich" instead of Nikol Vovaevich. At first, Kyrgyz President Sadyr Zhaparov also called the Armenian Prime Minister "Nikolay", but then he began to call him according to official data.

Given the fact that Yerevan has actually set its sights on leaving the CSTO, there was some intrigue before the summit - would Pashinyan start similar processes with regard to the EAEU? But, according to Kommersant, at the general meeting the Armenian Prime Minister "spoke peacefully, demonstrating that Armenia intends to continue to be a member of the EAEU and, perhaps, even take part in financing this organization". Pashinyan only complained about the slow creation of a single market of energy resources and long procedures of harmonization. After the general meeting, the Russian president had a separate meeting with Nikol Pashinyan. Earlier, the Kremlin said that these talks should resolve numerous issues that have accumulated in relations with Armenia.

Has it been decided? During the public part of this meeting, Putin only cited even more impressive figures - Armenia's trade turnover with the EAEU countries (which the Russian president used to call EurAsEC) has increased 14 times since 2015. Vladimir Putin also assessed the Russian-Armenian economic ties as very successful, noting that the trade turnover between the two countries has reached all-time highs, exceeding $7 billion. As for the security issues in the region, the Russian president promised to discuss it on the margins of the summit, too, but, obviously, in a closed mode. Pashinyan himself said last month that relations with Moscow are not going through the best of times.

A nourishing Eurasian environment

The Eurasian Union began to take shape in 1994 on the initiative of Kazakh President Nursultan Nazarbayev; Armenia joined the EAEU in 2015. Previously, Armenia sought to integrate into the European Union, for which a number of legislative measures were adopted and work was carried out within the framework of signing an association agreement with the EU. Therefore, heated debates broke out in Yerevan about joining the Eurasian Union. Supporters of the EAEU pointed out that Armenian products are not subject to European standards and therefore are simply not competitive in the EU. Besides, Western markets are oversaturated with their goods, local economic entities are much better adapted and financially secure than Armenian businesses. However, the geopolitical factor, which was supposed to serve Armenia's interests in the Karabakh conflict, was called the decisive factor in joining the EAEU.

Opponents argued that economic "Eurasianism" is not as beneficial as it seems. Armenia has no land borders with the EAEU countries, and therefore the customs privileges regime is not particularly relevant for it. Also, membership in the EAEU will tie Armenia to Russia, whose economy suffers from Western sanctions, fluctuations in oil prices, and so on. And the most important thing is the issue of "European values". Armenia allegedly stands above all EAEU members, including Russia, in terms of freedom of speech, civil rights, and the fight against corruption. Armenia, having practically completed negotiations on joining the Association with the EU in 2013, left this platform after joining the EAEU. After that, extremely disgruntled pro-Western NGOs in Armenia began to make their own calculations - what did Armenians lose, and to what extent would EU membership be more profitable than the EAEU?

According to their data, the EU GDP per capita was 2.4 times higher than in the EAEU. Hence, the natural conclusion was that it was much more profitable for Armenians to live together with rich Europeans than with "poor" Belarusians, Kyrgyz, Kazakhs, and ambitious Russians. However, it was not mentioned that no one was expecting Armenia to join the EU, unlike the EAEU, right from day one. The process of joining the EU in countries with much stronger economies and stable democracies stretches for decades. The report, prepared with the participation of the American institute NED, also pointed out that the EAEU has given Armenia nothing. For example, it cited data that in 2015, the first year of membership, Armenia's economic growth dropped from 3.6 percent to 3.2 percent.

And by selecting many other negative figures, it was claimed that during the first two years in the EAEU, the Armenian economy sagged significantly. True, it is not quite clear - was it the membership in the EAEU that harmed Armenia? But were these the first falls of the unstable Armenian economy? For example, the GDP per capita in Armenia in 1990 was $647 and in "market" 1999 it fell to $338. That is, the decline almost doubled just on the background of disintegration from the recently common economic space, and not vice versa. With the beginning of the global economic recession in 2009, Armenia's total GDP also decreased - by as much as 14.1 percent. And further, the Armenian economy continued to be feverish. Thus, in 2012, the growth of total GDP in Armenia amounted to 7.2 percent, and in 2013 - only 3.3 percent. But already in the EAEU in 2022, Armenia's total GDP grew by 12.6 percent. And the GDP per capita, which was $4,017 on the eve of accession, has already amounted to $7,018. That is, during its stay in the EAEU it has increased by 75 per cent.

It is precisely this economic dynamic that predetermined Pashinyan's "peaceful" speech at the EAEU summit in Moscow. After all, Yerevan has no real alternative to this economic union. And a significant part of the Armenian business elite is unlikely to understand and approve of the withdrawal from the EAEU. But the point is that the people currently in power in Armenia also serve the interests of another elite - the collective West. And they have been given a completely different geopolitical agenda.

Persistent promises of sustainability and development

Pashinyan has already taken a number of steps to de facto withdraw from the CSTO, de facto freezing Armenia's membership there. "By coincidence," all other EAEU members, except Armenia, are also members of the Collective Security Treaty Organization. It is quite obvious that just like the EU, which grew out of the economic "Common Market", the EAEU is not only an economic organization but also oriented towards a certain common political basis. While such amorphous structures as the EAEU and the CSTO are rather blurred, such a platform is nevertheless present. The EAEU, of course, was formed as an alternative to Western economic and other expansion into the post-Soviet space. But it is characteristic that two days after the Moscow summit, the "Days of Europe" started in Yerevan.

The program of these festivities runs till June 7. In opening remarks, Deputy Foreign Minister Hovhannisyan said: "Indeed, the Armenia-EU partnership has never been as intense as it is today. Three years have passed since the entry into force of the European Union-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA), and today all efforts are being made with the EU, France, and other partners for its more effective implementation". At the same time, the Deputy Minister called the European Union nothing more and nothing less - Armenia's key partner.

And various projects of European integration have been voiced one after another lately. Then Josep Borrell at the special Partnership Council will declare "A New Partnership Agenda between Armenia and the EU", and then President of the European Commission Ursula von der Leyen will announce a plan for sustainability and growth. And this process is developing despite the economic reality and the notorious decisive "hand of the market". So far, the specific needs of the Armenian economy have been met in practice more by the EAEU than by Ursula von der Leyen's broad-brush statements. Even critics of the Eurasian Union recognize that Armenia's economic ties with the EAEU countries have tripled over the past four years. So far, no one can name any sane alternative to this with the indication of specific European markets ready to accept Armenian products.

And, apparently, in order to give a certain logic to the political decision on European integration, it is again linked to security issues. Armenian media write: "The EU is ready to provide possible means for Armenia to develop its security system. The EU is not a military alliance and does not have military forces to provide direct assistance, it just has an opportunity to provide this assistance through appropriate funds and instruments".

At the same time, it is emphasized that "some countries," obviously France, provide military assistance to Armenia directly. But it will be even better when such assistance is based on pan-European policy, strategy, and resolutions of the European Parliament.

On March 27, the "Friends of Armenia Network", led by former NATO Secretary General Anders Fogh Rasmussen, stated that the European Union has not paid enough attention to Armenia's security in the past and that it is time to take bold steps to support Armenia in this sphere as well.

Russian media from time to time express dissatisfaction with such a duplicitous position of Yerevan, but in general, the Kremlin's reaction has been rather restrained so far. Armenia's accelerated cooperation with the West cannot but strain another neighboring country - the Islamic Republic of Iran. Moreover, Tehran has until recently taken a very loyal stance towards Armenia. Yerevan is now making soothing statements that the alliance with the EU and NATO countries, whose military contingents are already periodically appearing in Armenia, is not directed against Iran. Does Tehran believe this?

Diversified ally

Back in 2017, the parliamentary faction of the "Yelk" bloc of parties decided to submit a draft statement to the National Assembly " On the beginning of the process of termination of the Agreement on the Eurasian Economic Union by the Republic of Armenia". The “Heritage” and “Free Democrats” parties, as well as some NGOs also opposed membership in the EAEU. References were made to the deteriorating economic situation in Armenia and Russian-Azerbaijani military cooperation. At that time Nikol Pashinyan was a member of parliament representing this bloc.

And now Finance Minister Vahe Hovhannisyan calls leaving the EAEU too risky but calls for diversifying the economy and especially energy policy to ensure greater independence from Russia. Similar statements about the peculiarities of Armenia's membership in the EAEU were made by MPs from the ruling Civil Contract party. At the same time, Armenia's trade turnover with Russia increased by 93 percent in January 2024. The share of Russia in the structure of Armenia's foreign trade turnover also increased compared to the previous year - from 37 percent to 40.1 percent.

The Russian Federation leads in trade turnover with Armenia by a significant margin. Experts attribute this to the re-export of goods under sanctions and the influx of Russian capital into Armenia due to the Ukraine conflict. However, in March of this year, the European Parliament passed a resolution suggesting Armenia be considered for EU accession status. Yet, there are several caveats to this proposal. Firstly, Armenia would need to wait in the "waiting room" by signing an Association Agreement with the EU to attain candidate status. Secondly, it would have to commence the process of withdrawal from the EAEU, at least in part. Does this resolution effectively pressure Armenia to terminate its EAEU membership?

However, it appears that Armenia is unlikely to swiftly take steps to exit the EAEU, particularly under vague promises from Brussels akin to "getting married later." Unlike its departure from the CSTO, which Yerevan seems keen to replace with France and other NATO countries. Armenia's current ruling elite will probably continue exploiting the benefits of its special economic ties with Russia until a potential shift towards the West at some point in the future.

The views and opinions expressed by guest columnists in their op-eds may differ from and do not necessarily reflect the views of the editorial staff.