The Economics of the CU: Economists say membership in Armenia’s best interest

The Economics of the CU: Economists say membership in Armenia’s best interest


A group of economists have drafted a research upon the initiative of the Eurasian Development Bank on “Economic Calculations of Armenia’s Integration Processes with the Customs Union and the Eurasian Economic Union.”

The group, lead by Ashot Tavadyan, head of the Faculty of Economic-Mathematical Methodology at the Yerevan State University of Economics, summing up the results of the four-month research told the press on Wednesday that in the event of Armenia’s membership in the Customs Union (CU) “an Armenian citizen will have a safer and better life”.

The economist shared an opinion that Armenia has not matured for European standards yet and could have found itself “in trouble”, just like Baltic countries have, if it entered the EU free trade area.

The experts have concluded that with the CU Armenia may have a 4-percent economic growth in the initial period, while in case of joining the EU free trade area that index would have ranged between two and three percent only (they referred to European experts’ analysis of Armenia’s Association Agreement with the EU to draw parallels).

As opposed to Bagrat Asatryan, former chairman of the Central Bank, who voiced rather pessimistic perspectives in this concern, Tavadyan claims the Customs Union agreement with Armenia is “about economic security, as part of security in general”.

“This is an agreement of unprecedented investments and employment growth,” stated Tavadyan.

The economist says that the public transport fares will drop in Armenia, as Russia has promised to make a $470-million investment in that field.

“The other important factor is the $100 million investment by the Eurasian bank, which will ensure high tempo of economic growth in our country. As for the energy bloc, joining the CU means we will have a good chance of exploiting the nuclear power plant and building a new one in the future,” says Tavadyan, predicting that in the future Armenia, as a CU member, would import natural gas from Russia at a 30-percent cheaper price: today’s $270 per 1,000 cubic meter would cost $187.

“It will happen automatically, since the union ideology provides for fair competition, meaning that the gas tariff, in our case, would include only transportation and transit fees,” assures Tavadyan.

Another conclusion is that in the event of joining the CU Armenia's labor migrants would send 3 percent more remittances to Armenia, as they would have less trouble “finding employment and dealing with administrative issues”.