New government appointed in Armenia

By bne IntelliNews May 5, 2014

bne -

The Armenian president has appointed a new government that is widely seen as more supportive of the country's forthcoming accession to the Russia-led Customs Union. 

President Serzh Sargsyan made the final appointments to Hovik Abrahamyan's government on May 3. Sergo Karapetyan was appointed agriculture minister, and Gabriel Kazaryan will be sport and youth minister. Earlier the president appointed Ovannes Manukyan as justice minister, Aramais Grigoryan as energy minister, Karen Chshmarityan as economy minister and Gagik Khachatryan as finance minister.

Tigran Sargsyan resigned as prime minister on April 3 after his government's controversial pension reform was defeated in the constitutional court. The new law, which came into force on January 1, caused widespread protest, leading four opposition parties to question the law's compliance with the country's constitution.

On April 14, by a presidential decree, Speaker Hovik Abrahamyan took on the role of prime minister. The former PM, appointed in 2008, had said he had wanted to resign earlier but that the president dissuaded him due to Armenia's ongoing accession talks with the Customs Union. However, his resignation was also linked to his pro-Western stance.

By way of contrast, Abrahamyan has said he wants to strengthen Armenia's bonds with Moscow. Despite lacking direct overland links to any of the Customs Union existing member states - Russia is joined in the club by Belarus and Kazakhstan - the Armenian economy is set to benefit from membership, mostly due to expected Russian investment and cheap supplies of Russian gas. 

Former economy minister Vahram Avanesyan estimated membership would add between 0.5 and 1 percentage points to the country's annual economic growth. Armenia's economy grew by 3.5% last year and 7.2% in 2012, according to the CIS Interstate Statistics Committee.

Yerevan should also benefit from Moscow's promise to ease access to its labour market for Armenians. Despite a clampdown on migrant labour in the past couple of years in Russia, remittances from the country still account for 10% of Armenian GDP. 

At the same time, there is concern that this may complicate Armenia's demographic situation further. Emigration has been spiking recently due to a lack of economic prospects and high unemployment.

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