Media: Armenia's economy hangs on bypassing anti-Russian sanctions

Armenia's seemingly impressive economic growth hides the reality of stagnation, with creative re-export strategies and efforts to bypass anti-Russian sanctions, Caliber.Az writes, citing an article by the Armenian publication 168.jam.

"Armenia's economy continues its incredible ‘victory campaign’. The year started again with high growth rates. But it is not the economy that is growing, but only the indicators. The economy is still passive, there is no development in the economy, although the indicators of economic growth are reaching new heights," the material says.

Shedding light on the apparent paradox between soaring industrial production and a simultaneous decline in electricity generation, the article says: "Not surprisingly, industrial production increased by 21 per cent at the beginning of the year, while electricity generation declined. The electricity produced, which should have been used to produce the industry's output, has not increased, but we can see the kind of 'busy' activity the industry has registered. You won't find that in any economy in the world. It is fantastic because industrial production cannot increase by 21 per cent and electricity production decrease by 6.4 per cent. And this is after a decline in the previous year.

Delving deeper into the intricate dynamics, the article contends that the surge in industrial production isn't a reflection of genuine economic growth: “At the beginning of last year, electricity production in Armenia decreased by 1.5 per cent. Compared to last year's reduction, this year it has shrunk even more, but the growth rate of industrial production has been many times higher. It is not hard to understand how this is possible. In fact, it is not that industry has grown and more products have been produced, but that re-export schemes have improved. Previously, goods were imported and re-exported, but in recent months they began to be imported, Armenianized with documents, and then re-exported and shown that they were produced in Armenia. This is also a way to circumvent the sanctions that the Armenian authorities have been using since the end of last year. The outside is well aware of this, but out of political expediency, they don't let it be seen. They leave it to amaze people, to show the economic growth we know, to create an impression of unprecedented successes and achievements.

“No one says how it happened that modest output in some industries suddenly began to increase tenfold. More goods were produced in one month than in all the other months of the year combined. At the expense of what, when production capacities did not increase, no new productions were created? Everything remained the same, but the volume of production increased several times. It is clear that this did not happen at the expense of the economy. Recently, re-exports have been the cause of high growth not only in our foreign trade but also in industry. With such measures, it is not impossible that the economy, especially industry, will show much greater and fantastic growth in the near future. But the economy will continue to remain in the same deplorable condition as before.”

The growth that we had in the previous two years and that we see at the beginning of this year is largely due to the Russian factor. On the one hand, goods from other countries are imported and supplied to the Russian market, and on the other hand, Russian goods enter the markets of other countries through us. This stems from Russia's interests, but in between, the Armenian authorities and their proxies benefit. It is this interest that makes Russia condescend to the political atrocities displayed by our authorities. Otherwise, we would now be forced to pay a very high price for them.

Highlighting the temporary advantage derived from Armenia's role in circumventing sanctions, the report suggests that the country's economic future remains uncertain: “But this is a temporary advantage, from which the authorities at this stage are trying to get as much benefit as possible. As for what will happen later, when Armenia's role in circumventing sanctions ceases to be important, it seems easy to imagine.”

“The economic growth recorded in Armenia yesterday and today is primarily the result of the sanctions applied against Russia. In the past, this has been expressed in flows of human and financial capital, foreign trade services, and more recently in the Armenisation of imported goods and industrial growth.”

In essence, the article underscores the complexity of Armenia's economic narrative: “Given the sanctions applied to Russian products, Russian gold, diamonds and rough diamonds are imported into Armenia, presented as having been processed in Armenia and exported to the United Emirates and Hong Kong. Then they are proud that the UAE has become Armenia's second-largest trading partner. Also, large financial flows started coming from this country, as if economic relations were developing. Although the reality is quite different.”