YEREVAN, ARMENIA — When Armenia broke ranks last year with other former Soviet states marching toward Europe and pledged to join Russia’s new customs union instead, the goal of keeping a foothold in both the East and the West didn’t seem all that challenging.
It wasn’t the first time the country had pulled off such a high-stakes balancing act: For years, Armenia has been the only full member of the Russian-led Collective Security Treaty Organization military alliance to also participate in NATO peacekeeping missions. And with the United States and the European Union promising to continue economic development efforts, there seemed little to lose by joining Russia.
But that was before the Ukraine crisis, before Western-Russian relations sank to their lowest point since the Cold War, and before the ruble started plummeting erratically — pulling down currencies such as the Armenian dram along with it.
Now, as Armenia settles into its role as the smallest member of Russia’s new Eurasian Economic Union (EEU), the country is bracing for what even government officials admit could be a rough ride.
“I never heard of a situation where turmoil in a partner country was a helpful thing,” said Vache Gabrielyan, deputy prime minister and head of a new government ministry for international economic integration.
“The situation, of course, has changed,” he added. “But I don’t yet see any change that fundamentally alters the choice we made.”
Armenia’s decision to scrap negotiations with Europe over an association agreement — the sort that the E.U. recently signed with Ukraine, Georgia and Moldova — and join Russia’s nascent trade bloc was announced abruptly after a September 2013 meeting between the president, Serge Sarkisian, and Russian President Vladimir Putin in Moscow. Western diplomats said they were “surprised,” and some members of the opposition said the deal was “the result of Russian blackmail.”
Members of the Armenian government justified the decision as one that will give Armenia the opportunity to improve economic ties with both the E.U. and the EEU.
“In the framework of our humble abilities, we strive to serve as a bridge for these two organizations,” said deputy foreign minister Shavarsh Kocharyan, one of the key negotiators of the deal to bring Armenia into the EEU. Picking a side was simply a necessity, he added, because “nowadays, every state needs to be in an economic cooperation bloc. Germany, France – are they on their own? Heh.”
The idea that Armenia could help build E.U.-EEU economic ties appears to have some support in the Kremlin. Last week, Russia’s E.U. ambassador told the EU Observer, a news Web site, that Armenia was one of several countries that could facilitate trade between Russia’s new customs union and Europe.
What few in the Armenian government will admit, however, is that in choosing to side with Russia, they didn’t have much choice.
Armenia declared its independence from the Soviet Union 23 years ago. But Russia remains the tiny country’s most vital link to the outside world.
Russia hosts the largest population of Armenians outside of Armenia and is the largest source of remittances, which accounted for more than a fifth of Armenia’s national income last year. Russia has a monopoly on selling Armenia cheap gas through 2043, and Russian state-funded television broadcasts are how many Armenians get news and information.
While Europe remains Armenia’s largest export market, Russia is the key destination for non-raw material goods, which Gabrielyan says will help Armenia diversify its economy — especially, he said, because Armenia is not yet ready to compete in Europe.
Few public officials, even those who have criticized the president, discount those ties. Last month, Armenia’s parliament voted overwhelmingly to approve joining the EEU.
The EEU deal-making process “was misguided and should have been done differently,” said Vartan Oskanian, Armenia’s former foreign minister and a member of Prosperous Armenia, parliament’s second-largest party. But lawmakers backed EEU membership “given the importance we attach to Armenia’s relations with Russia.”
Yet the most important factor driving Armenia’s participation in Russia’s new economic union isn’t economic.
“We have a security issue which demands us to take faster steps,” Kocharyan said, explaining that benefits of European association would take longer to realize than joining the EEU. “Such long-term projects are very important, but we can never exclude the possibility that the day after tomorrow, we may have to impose peace on our neighbors.”
Russia is Armenia’s chief supplier of arms, at discounted prices, and maintains a military base in the country. Armenians consider that a vital asset in their two-decade-long, frozen conflict over the status of Nagorno-Karabakh, an ethnic Armenian enclave within Azerbaijan that declared independence as the Soviet Union was coming apart.