Armenia no longer likes EEU

By Vestnik Kavkaza
Armenia no longer likes EEU

Armenian parliamentarians refused to review draft statement on the withdrawal of Armenia from the EEU, proposed by the Elk opposition faction ("Exit"): majority of them (76) voted against adding this issue to the agenda of a four-day parliament session. Only six MPs from the Elk faction voted for it. Adoption of this document would be enough to begin the process of the country's withdrawal from the EEU, which, according to the authors, would limit Armenia's capabilities, including establishment of trade relations with other countries, which, in their opinion, can deal a serious damage to the country's collapsing economy.

Authors of the initiative believe that during three years of Armenia's membership in the EEU, there has been a significant regression in a number of socioeconomic spheres: "Armenia's GDP dropped by 8% in dollar terms, employment rate decreased by 13%, international reserves by 40%, national debt rose, inflow of net investments in 2014 amounted 167.4 billion drams ($345.8 million), while in 2016 it decreased to 81 billion drams ($167.3 million)," the document says.

The ruling Republican Party of Armenia (RPA) considers these arguments are unwarranted, noting that any union requires institutional development.

Nevertheless, Armenian media intentionally aggravate the situation, promoting hysteria around the country's membership in the EEU and manipulating facts and figures in every way.

For example, in an article "Pitfalls of the EEU", Haykakan Zhamanak newspaper writes that when people discuss negative factors expected from the EEU, only those that have direct impact are mentioned: "For example, new higher custom duties on goods imported to Armenia from third countries. 

Custom duties will indeed rise, they will indeed lead to a certain rise in price for different products, but the government present it like the price increase won't be that big and won't have a significant impact on the overall price growth rate," the article reads.

And then author mentions indirect factors that can have a much greater negative impact on the economy of Armenia, calling them "pitfalls." As an example, he cites the import of organic products for non-commercial purposes. "When you bring organges or tangerines from Georgia, which is not a member of the EEU, and their weight exceeds 5 kg, you need a phytosanitary certificate for them," he writes, somehow "forgetting" that the majority of the EU countries prohibit import of many types of fruits and vegetables without necessary papers.

Another example the author brings up - many products imported to the territory of the EEU from third countries must be marked. "For example, a small entrepreneur from Armenia brings TVs of different types and sizes from Dubai or from somewhere else, pays custom duties and puts them up for sale in his shop. He can no longer do this, because in the EEU, you can't import any product. You can import only those products that passed necessary certification in the EEU laboratories to ensure that they are safe. If it passes the inspection, you will receive a certificate and this product will be marked, but this costs money. Our importers don't have enough resources to receive certificates for each product they buy," the author says.

He complains that importers will be forced to buy only those products that are already certified by large Russian or Kazakh importers, and lose opportunity to "create", bring new products and study markets. Why couldn't he ask an ordinary Armenian, what does he want to have at home - an inexpensive and high-quality product made by respected manufacturer and certified by a major importer, or an unknown "exclusive" product with a hieroglyphic instruction, manufactured somewhere in China?

"Even large businessmen of the country won't be able to withstan this," the author continues. "If a businessman imports certain product from a third country and takes 20-30% of the Armenian market, then soon he can lose this market share. The thing is that even if you import 100 units of certain product, when someone else imports 10 thousand units of the same product, your product will be uncompetitive in this market," the author says, adding that Russian or Kazakh businessmen will be the ones who import more, because they have much more resources, the scale is much larger, the market is much larger.

In connection with this, there's another question: What's wrong with that, if the consumer will get inexpensive and high-quality product from a serious retailer, not from a second-hand speculator or a small wholesaler? Armenian writers can't be bothered to think about that.

It's time for Armenian consumers to understand that the modern market is not about private deals with second-hand dealers or even all kinds of "supermarkets" of local "importers", it's a network of stores with serious suppliers, well-established logistics, quality certificates, phytosanitary control and many other equally important parameters.

"It's not important for consumers who controls the domestic market - their oligarch or Russian. The greatest danger appears when it comes to production. All products that can be produced both in Armenia and Russia will be definetely produced in Russia," the author says. But why? If Armenia can produce high-quality cognac or copper concentrate, it will be bought both in Russia and Europe, just like, for example, they buy Armenian apricots. And there's no need to complain that Armenian producers will move to southern Russia, where gas, electricity and raw materials are cheaper. It's just necessary to create normal conditions for them, not complain about possible consequences for a collapsing economy.

There's a saying in the Old Testament: "For everything there is a fixed time, and a time for every business under the sun. A time to take stones away and a time to get stones together." You just have to work hard and keep on trying: even the European Union, which Armenian opposition loves so much, is still adjusting its structures even after 60 years...