Under the Kremlin Thumb: Pre-Election is period of deal-making – favoring Big Brother

Over the past two weeks a number of factors have most clearly outlined the pressure Big Brother and strategic partner Russia is putting on Armenia for not embracing the “neo-soviet” idea of Vladimir Putin’s Eurasian Union.


“If not for Russia Armenia would most probably not even be on the map. Armenia enjoys today’s status solely due to Russia and is able to survive again solely due to Russia,” wrote Kremlin-adjunct Mikhail Leontyev, commentator for Odnako magazine.

The latest issue of Odnako led by Leontyev, who is viewed as Putin’s non-official spokesman, is titled “Whither Armenia?”. Leontyev in his article titled “Armenia enjoys today’s status solely due to Russia” mocks that “Armenia has no alternative” other than entering the Eurasian Union and that “its ravings about European choice are rather strange”.

Why now? Why is Russia concerned about Armenia now? There are two reasons: first, it’s a pre-election period and, second, Armenia’s success in the negotiations on signing the European Union Association Agreement.

The pre-election period is optimum time for putting pressure on the authorities, and that pressure is obviously being exerted.

Various politicians and political analysts have stressed a number of times that Putin’s idea of creating a Eurasian Union with ambitions of becoming the European Union’s competitor and counterweight, in reality is set to solve Russia’s “empire-worshipping” goal of completely depriving smaller countries of their sovereignty.

Yet in April-May Armenian Prime Minister Tigran Sarsgsyan in his interviews to two Russia-based periodicals Vedomosti and Gazeta.ru said that “entering the Customs Union” which is the basis of the Eurasian Union “is pointless to us because we have no common borders”.

Speaking publicly against the Customs Union meant opposing also Armenia’s potential membership in the Eurasian Union; as Putin pointed out in his famous article of October 2011, the creation of a free trade zone – the Customs Union – would become the foundation for building a much bigger – Eurasian - union.

The Armenian premier in his interview to Gazeta.ru even suggested that a special status be granted to Armenia “respective subsidizing, assistance, grants, if it is about integrating into a respective economic area. Economic stimuli have to be created to motivate integration.”

Theses bold sentiments faded away in August when during Putin-Sargsyan’s meeting, Putin distantly answered the premier’s suggestion saying “we will discuss it”.

It was right after this that persistent speculations started in Armenia’s political backstage on premier Sargsyan’s possible dismissal. In September the sentiments changed yet once again.

During the newly-elected parliament’s very first Q&A the premier, responding to Armenian Revolutionary Federation MP Artsvik Minasyan’s question, said something completely opposite to his earlier statements: “There is one absolute truth: the steps on creating a free trade zone around Russia, Kazakhstan, and Belarus have illustrated the advantages of that process.”

In Armenia Putin’s promise to discuss the issue was interpreted as the last chance for positive cooperation.

Political analysts did not rule out that just as the Ukrainian premier had set a condition for entering the Customs Union – Russia would have to sell natural gas for $150 per 1000 cubic meters -- Armenia, as a strategic partner, would be able to claim gas for no more than $180.

These hopes died last week when the data placed on State Revenues official site made it clear that since July Armenia has been purchasing gas for $244, rather than the officially announced $180.

This confirms radical opposition Armenian National Congress MP Levon Zurabyan’s claims that “the government has been hiding the price-hike in gas tariffs” not to create tensions among public prior to the presidential elections.

At the National Assembly’s Q&A during the previous four-day session Zurabyan raised a point that the government had been paying the added gas tariff by selling shares of ArmRusGasArt stock, which is 20 percent owned by Armenia. It has been speculated that the government sold its share for $157.5 million. Zurabyan asked the prime minister whether this information was accurate.

Minister of Energy and Natural Resources Armen Movsisyan answered the question saying that “negotiations are in process with Russia over the gas tariffs, and as soon as they are completed people will be informed”. But before anyone was “informed” the damaging news emerged on the State Revenues site.

This latest “property for gas” deal has once again pointed out the truth in Leontyev’s commentary when he writes that Armenia put herself “in total dependence” of Russia.

The tradition of such resource for security trades was first set prior to the urgent presidential elections of 1998, when 45 percent of ArmRusGazArt company share was given to Russia as compensation for natural gas, then prior to the 2003 election a whole package was given by a “property for gas” deal which included five major entities, and after the election Sevan-Hrazdan cascade was given away as a payback for $25 million worth of atomic fuel supplied to Metsamor Nuclear Power Plant.

In 2007 and 2008 the communication field and the railways were sacrificed for the 2007 and 2008 parliamentary and presidential elections, as well as Hrazdan Hydro Power Plant’s fifth energy block – Iran back then was offering much more favourable purchase terms than Russia.

Hrazdan’s fifth block was given away in 2007 for gas subsidy – back then Russia, again, had raised the tariff 2.5 times and in order to ease the social tension the Armenian government subsidized the gas price for two years, and did it by selling the energy block for $60 million cash and the remaining $189 million as payment for the subsidy. Nonetheless, the gas tariff underwent a drastic 40-percent hike in 2009.

“This is the consequence of a short-sighted policy, which continues up until now and will keep damaging us. And this kind of short-sighted policy will ultimately lead us to entering the Eurasian Union which is potentially dangerous to us from several perspectives,” former foreign minister, MP Alexander Arzumanyan told ArmeniaNow.

While messages and reminders are voiced by Russia on different levels on Armenia’s status as its “outpost”, Armenia is expecting Putin’s visit which has been postponed three times since late September. Political analysts assume it is being postponed “because of attempts to come to certain agreements”.