Armenia’s exports to Russia raise concerns over sanctions circumvention

Despite deteriorating political relations between Armenia and Russia, bilateral trade has flourished, leaving Western partners wondering over Yerevan’s approach to sanctions.

In the aftermath of the sanctions against Moscow, Armenia’s exports to Russia tripled in 2022 and then doubled between January and August 2023, providing ground for accusations about the South Caucasus country’s compliance with the Western sanctions regime, Euractiv reported on March 28.

While the political relations of Armenia with Russia have largely deteriorated in the last few years, bilateral trade with Russia flourished.

Since Armenia’s accession in 2014 to the Russian-led Eurasian Economic Union, Russia has become Armenia’s number one trading partner. Russia’s share in foreign exports of Armenia further increased in the aftermath of the invasion of Ukraine.

In 2023, trade with Russia accounted for over 35% of the country’s foreign trade, compared with the EU’s 13% share in the total.

The Armenian economy’s high dependency on its trade with Russia has made it practically impossible for the country to join the sanctions against Moscow without risking unprecedented economic downfall.

Many in Armenia are worried that the Kremlin can use Armenia’s economic dependency as political leverage, with recent opinion polls conducted by the International Republican Institute (IRI) showing that 40% of Armenians view Russia as the most significant political threat to their country, after Turkey and Azerbaijan.

Meanwhile, Russia has in recent months already blocked on several occasions the import of Armenian products on its ground checkpoint with Georgia.

In 2022, the volume of trade between Armenia and Russia nearly doubled, reaching $5.3 billion, according to Armenia’s state statistics agency. This trend continued apace in 2023 and in the early months of 2024. The increase in Armenia’s exports to Russia is largely due to the re-export of products from third countries.

According to the UN Comtrade Database, the list of products exported from Armenia to Russia in the last two years includes but is not limited to, mobile phones, computers, headphones, and other technical equipment.

Meanwhile, to increase oversight of possible sanctions circumvention by Armenia-registered companies, the country’s authorities introduced in 2023 mandatory government licenses for shipments of microchips, transformers, video cameras, antennas, and other electronic equipment to Russia.