Despite some existing problems, Russia and Armenia retain a close alliance. This was once more underlined in a non-official summit held in Moscow last August.
On August 8, a Russian-Armenian summit took place in Moscow. Armenia has long been among Russia’s closest allies and, given the difference in size between the two countries, could be expected to have limited leverage in negotiations with the much larger power. Armenia’s President Serzh Sargsyan was formally on vacation, which he interrupted to attend the Moscow meeting.
However, the summit demonstrated that Armenia was able to defend its interests against its powerful partner. Although some experts were quick to point out that joining Armenia to the Russia-led Customs Union was not a priority during the meeting, the proceedings showed that this issue was indeed high on the agenda. Armenia’s membership in the Customs Union was previously discussed during a visit of Sergey Naryshkin, Chairman of Russia’s State Duma, to Armenia on July 23-24, as well as during President Sargsyan’s meeting with Russian Prime Minister Dmitri Medvedev in London on July 28.
The Customs Union resembles the Maastricht Treaty of the EU and is intended to underpin a geopolitical pole in Eurasia centered on Russia, usually termed the Eurasian Union. These ideas were presented in a series of articles by President Vladimir Putin appearing earlier this year before he was again elected President of Russia. A Customs Union is already established between Russia, Kazakhstan and Belarus, based on a treaty signed on October 6, 2007. Russia is eager to also include Armenia in the Customs Union and is able to apply significant leverage on the small country not least by conditioning the supply of natural gas which Armenia lacks. Russia currently supplies gas to Armenia priced at US$ 186 per 1,000 cubic meters, which is much cheaper than the Russian supplies to any of its neighbors.
Yet, Armenia remains skeptical to membership in the Customs Union. Armenia always signs agreements on free trade in the CIS, the free-trade zone agreement signed on October 18, 2011, in St. Petersburg being the latest example. On September 12, 2012, Armenia became the fourth country to ratify this Agreement. However, Armenia also seeks a free-trade and other Association agreements with the EU. It is currently in advanced negotiations with the EU on a Deep and Comprehensive Free Trade Agreement (DCFTA) as Armenia is a member of the EU Eastern Partnership initiative. Membership in the Customs Union may hinder these processes, and Armenia hopes to benefit from both free trade zones.
To counter Russia’s pressure to join the Customs Union, the Armenian side brought a set of arguments to the summit. First, Armenia has no common borders with either member country of the Eurasian Customs Union. In particular, it is separated from Russia by Georgia, which has no relations with Russia, and by Azerbaijan, which has no relations with Armenia. Second, no clear concept either of the Eurasian Customs Union or the EurAsEC economic union as a whole has been elaborated. Hence, it is unclear to Armenia which organization it should join. Third, Armenia remains a valuable ally to the CIS and to Russia in particular, since it is now the only South Caucasian country which favors military cooperation with Russia. This is all the more evident given the lack of success in Russia’s recent negotiations with Azerbaijan regarding the Gabala radar station.
In a recent quote, President Sargsyan stated that “The military and technical cooperation is also taking up speed. In 2010, we extended the time terms for deployment of the Russian military base in Armenia. We trust that the presence of the Russian military base in Armenia emanates from our security interests. This fall, we will conduct CSTO military exercises in Armenia. Overall, I believe that through the deepening of our relations, we are promoting peace and security in the Caucasus.”
Sargsyan implies that not only does Armenia need Russia, but Russia also needs Armenia. Relations between the two countries are not devoid of problems. A permanent issue has been the fact that the Russian labor market attracts a large number of skilled Armenians every year. Another problem emerged in early September, when the Russian Foreign Ministry offered only a slow and weak reaction to Azerbaijan’s release on August 31 and pardon of military officer Ramil Safarov, sentenced and imprisoned in Hungary for the murder of an Armenian officer. Russia’s reaction came three days after the event in contrast to the immediate denouncement by the U.S.
However, Russia and Armenia remain important partners. As for the Customs Union, Armenia was given the special status of an observer who can participate in the formation of the Union, which at least buys it time. The problem of the natural gas price was also discussed at that meeting, but no final decision was taken. Armenia will most likely retain the beneficial price this winter. This is a limited burden for Russia as the quantities used by Armenia only represents a fraction of Russian exports.