Sanctions: Armenia may feel fallout from West’s punishment of Russia

Experts claim that sanctions by the West against Russia because of the Ukrainian crisis have put Russia-dependent Armenia in a difficult economic state.

Although Armenian neighbor Iran’s resistance against the West did not have any major negative results on Armenia, this does not serve as a ground to think that Armenia will be able to withstand the problems awaiting the Russian economy.

Armenia is attached to Russia by several economic routes. The majority of Armenian labor migrants work in Russia. In 2013 money transfer from Russia to Armenia made $1.6 billion.

Russia is one of the biggest investors in Armenia, a number of leading Russian companies working in Armenia, such as Gazprom, InterRao EES, Rosneft, Areximbank-Gazprombank, VTB-Armenia bank and others are sanctioned.

Russia is also the main Armenian trade partner; importing three-fourths of its good from Russia and exporting one-fourth.

President Serzh Sargsyan reflected on the influence these sanctions had on Armenia, answering questions regarding the negative consequences of these sanctions on the Armenian economy.

“Those who side with this viewpoint base it on the fact that if the Russian economy has little or no growth, and because our economy is tightly connected with the Russian, there will surely be negative consequences for Armenia. I cannot reject that hypothesis,” Sargsyan told Armnews channel emphasizing that “it is simply a hypothesis”.

According to political analyst Yervand Bozoyan’s evaluation, the serious geopolitical crisis stemming from the Ukrainian civil war has put Armenia in a complicated situation.

“Armenia depends on Russia, but it has some dependence on the West as well. Armenia must try to use policy which will not raise anger on either side,” the political analyst told ArmeniaNow.
“If the Ukrainian crisis continues, at least the amount of transfers will decease. If we consider that the annual amount of transfers forms almost an equal sum as the Armenian state budget, then it is a serious threat to the consumer market, which is decreasing even without it,” Bozoyan added.

It is noteworthy that right after the West started sanctions the USA warned all countries, including Armenia, which are in good relations with Russia, “that dealing with sanctioned people or companies will put their reputation at risk.”

The US Embassy to Armenia gave an interview to Freedom radio station where it advised to cease all transactions which contradict the sanctions applied against Russia. The problem is that many companies in Armenia, such as Gazprom, InterRao EES have a monopolistic role and blocking their activities is impossible.