Leonid Vardomsky, the head of the Center of Post-Soviet Studies of the RAS Institute of Economy
Armenia, like the majority of post-Soviet countries, tries to provide a multi-vector foreign policy. It is explained by a complicated geopolitical situation in the country, first of all, the unsettled Karabakh problem and the vast geography of the Armenian Diaspora.
Among economic reasons of the multi-vector nature there is a limited internal market, overload of labor resources under a deficit of capital and technologies. As the result Armenia significantly depends on foreign outlet markets of its products and on foreign demand on its labor resources. At the same time, the country cannot fully use the factor of big marketing area within the CIS because of the transport blockade and high transport expenses on transiting through Georgia or Iran.
On the other hand, Armenia takes one of top places among new independent states on institutional conditions of business providing. Evaluating the business climate of 185 countries, the World Bank registered the shift of Armenia in the Doing Business Rating from the 50th place in 2011 to the 32nd place in 2012. However, progress of market institutions doesn’t bring necessary socio-economic effect without access to foreign markets.
The European vector
Armenia was one of the first countries in the CIS to join the WTO in 2003 for an extension of cooperation with the EU. It led to a decrease of Georgian traffic rates. In 2004 Armenia joined the European policy of neighborhood; in 2009 in the context of the global financial crisis it became a member of the Eastern Partnership. In 2010 Armenia was offered signing the agreement on association which included an article on a deep and all-round free trade area. The aim of the agreement is political association and gradual economic integration into the EU.
From this point of view the EU market is the greatest for Yerevan: in 2011 45.5% of Armenian export referred to the EU countries, and only 20.1% - to the CIS countries, including the Customs Union – 17.3% and Russia – 16.6%.
The road map for Armenia adopted in 2012 within the Eastern Partnership speeded up preparation for the agreement on Association with the EU.
The Eurasian (Russian) vector
Intensification of cooperation in the Eastern Partnership is taking place in the context of Russia’s growing integration efforts in the sphere of the Customs Union within EurAsEU and the all-round free trade area in the CIS (Armenia joined the area in September 2012). In general Armenia’s integration policy is determined by an opportunity of simultaneous participation in the free trade areas with the CIS and the EU countries, like Ukraine.
The Prime Minister of Armenia Tigran Sarkisyan said in an interview with the Latvian newspaper Neatkarigas Rita Avize that he shared the view of Russian President Vladimir Putin that the process of integration of the CIS and the European Union cannot be contrasted, they should be considered as mutually complementary: “Armenia has the same position. We appreciate and want to develop mutually beneficial trade and economic contacts with the EU countries… We took responsibilities on launching the EU standards in economy and we won’t reject this plan.”
The common view of the Armenian elite is that cooperation within the Eastern Partnership and the association with the EU will enable to establish a modern state, while cooperation with Russia will provide the country’s security.
At the same time, either Russia or the EU asks Armenia to make an integration choice because according to some European representatives, the association with the EU and the deep free trade area don’t match the Customs Union.
Can the multi-vector course be maintained?
Armenia like other countries of the CIS which are not members of the Customs Union has found itself in a difficult situation. Improvement of the Eurasian vector means rejection of the familiar multi-vector model for Armenia which has many international treaties and duties and has developed the strategy of the foreign political activity for the near future.
Considering the reaction of the country’s leadership, it is not ready to change the developed course.
Expert Andrey Areshev thinks that it “can be explained not only by counter-offers from Washington and Brussels (which are rather declarative and abstract), but also by absence of conceptual clearness in the Eurasian integration union.”
