Armenia and EEU: Economic benefits from membership below expectations yet

Ten months after Armenia formally became a member of the Eurasian Economic Union (EEU) its economic expectations have not been met yet, say observers, not only referring to statements by opposition politicians and economic analysts, but also citing the official statistics.

In an interview with the German broadcaster, Deutsche Welle, published on Wednesday Armenia’s former President Robert Kocharyan said that although initially it was said that by joining the EEU Armenia is creating more opportunities for businesses and exporters, the time that has passed since then shows that is not the case.

“About a year has passed, but exports have not increased, on the contrary, they have shrunk. Trade with Russia has fallen.

Some events have taken place and they have drastically changed the situation. The sharp depreciation of the [Russian] ruble against the U.S. dollar took the process in the direction opposite to the expectations of the Armenian authorities,” said Kocharyan.

According to the National Statistical Service, during the first nine months of 2015, compared to the same period last year, Armenia’s trade with other EEU member countries also decreased. Thus, while Armenia’s trade with Russia fell by 14.1 percent, its trade with Belarus and Kazakhstan decreased by 17.3, and 21.2 percent, respectively. And Armenia’s overall foreign trade turnover decreased by 20 percent.

According to former president Kocharyan, the realization of economic expectations was also hindered by Western sanctions imposed on Russia as well as the consequences of Russia’s anti-Western sanctions restricting some imports and its import substitution policy.

“That’s why the ‘festival’ promised to Armenian businesses did not take place. But at the same time, this period is too short for the final evaluations. Signals are such that our government should be very active and creative in its approach to this situation and understand that a good life will not be gifted to anyone just like that,” Armenia’s former leader added.

He stressed that in case of membership in any union it is important for the country to have good and efficient governance. “The conditions for your businessmen to work in need to be efficient, you should encourage the export component of your economy. Only then will it be possible to find a proper place in the larger economic space.”

On Wednesday, Chairman of the State Commission for the Protection of Economic Competition of Armenia Artak Shaboyan stated that many Armenian companies are interested in participating in public procurement competitions in the EEU, but are unable to do so because of a number of procedural issues.

“The first and most important issue is related to electronic signatures, as in the territories of the EEU member states public procurement is carried out electronically, in particular, in Russia and Kazakhstan,” the official explained to RFE/RL’s Armenian Service.

It is noteworthy that the Armenian authorities have repeatedly stressed that even if Armenia had not joined the EEU, its economy would still have encountered problems this year conditioned by close economic relations with the countries that are members of the EEU.

During the first nine months of 2015 Armenia’s domestic trade also decreased by 5.6 percent as compared with the same period of 2014. Economic experts largely ascribe it to the decrease in the amount of private remittances wired back home by Armenian migrant workers in Russia. According to the data of the Central Bank, during the first nine months of this year, private remittances to Armenia decreased by 26.3 percent.