January Stats: Figures for Armenian exports to Russia, Georgia reveal problems in EEU regulations

The recently published detailed statistics on Armenia’s foreign trade turnover in January 2015 may be an indication of new fundamental trends in the Armenian economy as well as lingering problems with the new economic grouping that Armenia signed up to from the beginning of this year.

As it follows from the data of the National Statistical Service, in January of this year the trade turnover between Armenia and a number of European countries has increased significantly, while trade with countries that are members of the Eurasian Economic Union (EEU) and the Commonwealth of Independent States has reduced.

Overall, Armenia’s foreign trade turnover decreased by 30 percent. But, as it turned out, exports to Russia decreased by 99.9 percent. In other words, after Armenia’s entry into the EEU on January 2, Armenia practically ceased to export to Russia.

Economists still cannot explain this fact. It is believed that the actual export to Russia continues, but there are problems with registration. Apparently, Russia has not managed to reach an agreement with Georgia on the recognition of the Eurasian barcodes and on duty-free transit of goods from Armenia to Russia. Experts say it is possible that now goods from Armenia that are sent to Russia are registered as exports to Georgia, and only from there they are registered as export to Russia.

What substantiates this version is that in January exports from Armenia to Georgia increased 3.4-fold. This shows that Georgia is still an obstacle to the Eurasian integration of Armenia. Tbilisi does not refuse to implement the Russian-Armenian transit, but it does not want to draw it up as “Eurasian”. The Eurasian Union has not been recognized in the world as an operating economic bloc, and European countries still refuse to make legal transactions with the EEU.

At the same time, according to the statistics, in January Armenia’s exports to France increased by 62.8 percent, to Greece – 17 times, to Spain – 42.4 times, to China - by 44.6 percent, to Japan – by 52.6 percent, to Iraq – by 12.6 percent.

Experts already characterize this as a change in the economic orientation of Armenia, which is getting more associated with Europe and Asia than Russia.

As the main reason for the economic turmoil in Armenia, international financial institutions cite Armenia’s extremely high dependence on Russia. According to international financial institutions, there are several levels of dependence – this is energy dependence and the fact that Russia is one of the key markets for Armenia. But most importantly it is the heavy dependence of Armenia’s consumer market on private remittances sent from Russia.

Judging from the statistics of January, Armenia’s dependence on the Russian export market has declined considerably. As for transfers, there is still no information about the January figures. However, by the end of 2014 the volume of transfers was steadily declining. This is due to the devaluation of the Russian ruble and the decrease in the number of those who want to go to Russia for migrant work.

Armenia’s energy dependence on Russia remains nearly at the level of 100 percent. Moreover, in Armenia there is a talk about the likelihood of increased tariffs for natural gas and electricity, whose production and distribution is carried out by Russian state-owned companies.

The Armenian government, despite the approval of the sale of the Vorotan hydropower cascade to an American firm has not yet signed the final agreement. This could lead to reduced dependence on Russian state-owned corporations. And many are waiting for this decision as a signal about the government’s intention to really diversify the economy.

But these issues do not become subjects for debate in the parliament, which is busy with solving fragmented tasks.